Lord Cullen of Whitekirk

William Douglas Cullen, having been created Baron Cullen of Whitekirk, of Whitekirk in the County of East Lothian, for life—Was, in his robes, introduced between the Lord Rodger of Earlsferry and the Baroness Linklater of Butterstone.

Sun Exposure and Skin Cancer

Baroness Finlay of Llandaff: asked Her Majesty's Government:
	Whether they plan any action to discourage sun exposure, including the use of sunbeds, particularly among young people at risk of developing skin cancer.

Lord Warner: My Lords, we have, with key stakeholders, developed the SunSmart campaign, run by Cancer Research UK. The campaign was launched in March and funded by the UK health departments. Campaign leaflets and posters have been sent to all GP surgeries, secondary schools and health promotion units. A copy of the leaflet is in the Library of the House.
	The advice given by the Health and Safety Executive on sunbeds is that no one should exceed 20 sunbed sessions per year. Under-16s are advised not to use sunbeds at all. The Department of Health "SunSafe" webpages provide advice on sun safety and are designed to be attractive to children.

Baroness Finlay of Llandaff: My Lords, I thank the Minister for his reply and take the opportunity to congratulate him on his appointment. I declare an interest as someone who has had sun-induced skin cancer and who has been married to a dermatologist.
	I have grave concerns about the Minister's reply, because the excellent campaign with Cancer Research UK has only just started. Does the Minister recognise that Australia, after a 20-year ongoing campaign, has managed to cut the numbers of deaths through malignant melanoma? Even though Australia has a higher number of cases per annum, it has about 1,000 deaths per annum, whereas we have about 1,640 per annum. Malignant melanoma is now the third main killer of young people.
	Does the Minister also recognise that schools need to be actively involved in a long-term campaign so that children do not have PE at lunchtime out in the open, are encouraged to cover up, and schools are encouraged to create shade?

Lord Warner: My Lords, I thank the noble Baroness for her welcoming remarks. It is worth informing the House that the Sun Know How campaign was run by the Health Education Authority between 1994 and 2000, so it is not as though we are just starting with this particular campaign. We intend to carry on with the campaign, as I think I made clear in my initial Answer. Children are at the centre of the campaign. Much effort is being devoted to making the webpage attractive to them. The national and regional media, broadcast and print, carry a lot of information about the campaign which provides parents with information to give to their children.

Lord Clement-Jones: My Lords, while I greatly welcome the public health campaign, the SunSmart campaign, will the Minister consider the regulation of sunbed parlours? As he knows, sunbeds double the risk of contracting skin cancer. Are sunbed parlours inspected by the National Care Standards Commission or will they be inspected by CHI? Are there any limits on the use of sunbeds by under-16s, as is proposed in Scotland?

Lord Warner: My Lords, the Department of Health's medical view is that the use of sunbeds should be discouraged. However, I draw the noble Lord's attention to the advisory committee on non-ionizing radiation chaired by Sir Richard Doll which recommended that the use of sunbeds and sun lamps for cosmetic tanning should be discouraged. However, it also said that the scientific evidence is as yet insufficient to permit a firm conclusion regarding a causal relationship between the use of tanning lamps and skin cancer. Inspecting and ensuring safety in parlours where sun lamps and sunbeds are used is the responsibility of the Health and Safety Executive, which has issued guidance on the subject, and local environmental health officers.

Baroness Gardner of Parkes: My Lords—

Lord Berkeley: My Lords, will my noble friend explain—

Lord Williams of Mostyn: My Lords, the noble Baroness, Lady Gardner, is going to ask a question about Australia.

Baroness Gardner of Parkes: My Lords, as an Australian I have suffered many skin cancers although I came to live in the northern hemisphere in my early twenties. However, it is what you do in terms of exposure to the sun when you are young that matters. Fortunately, basal cell carcinoma is not the same as melanomas, which are much more horrific, but I must have had dozens removed. Does the Minister appreciate that in Australia the "Slip, Slop, Slap" campaign—that is, slip on your cream, slap on your hat and so on—has been more effective since sportsmen have put cream on their faces? They comprise the peer group for young people. As I say, it is what you do in terms of exposure to the sun when you are young that matters. The peer group for young people comprises sports heroes. Will the Minister ensure that sports heroes are also involved in such campaigns in this country?

Lord Warner: My Lords, we miss Shane Warne and his icon image covered up in the sun. We must approach Michael Vaughan and see what he can offer.

Lord Berkeley: My Lords, can my noble friend explain the role of the Health and Safety Executive because, quite rightly, it gave guidance as to how often people should use sunbeds, but surely its role is defined in the 1974 Act as being responsible for looking after people at work? Is my noble friend really suggesting that everyone who is on a sunbed is at work in a "slip, slop, slap" in a massage parlour?

Lord Warner: No, my Lords, but I am suggesting that the Health and Safety Executive issued guidance in 1995 on the use of sunbeds in commercial premises. The fact that they are in commercial premises means that the HSE becomes involved.

Baroness Whitaker: My Lords, will my noble friend confirm that the Health and Safety at Work etc. Act, Section 3, obliges employers to protect members of the public who may be at risk because of their faulty working practices?

Lord Warner: My Lords, I understand that. The Health and Safety Executive has issued extensive information and literature on controlling health risks and on the use of ultra violet tanning equipment. That information is available to people running sunbed parlours and to the public.

Baroness Masham of Ilton: My Lords, what is the percentage of people who go abroad and get skin cancers as compared with those who holiday at home?

Lord Warner: My Lords, I do not think that information is available but I shall inquire and write to the noble Baroness.

Earl Ferrers: My Lords, the Question seems to relate mostly to children. Does it mean that those who are of riper years are all right from the point of view of sunbeds and sun?

Lord Warner: My Lords, I believe that all of us should wear a T-shirt, a wide-brimmed hat, sunglasses and factor 15 sunscreen when out in the sun.

Foreign Direct Investment

Lord Watson of Richmond: asked Her Majesty's Government:
	What measures they intend to take to reverse the decline in the United Kingdom's share of foreign investment from outside the European Union.

Lord Evans of Temple Guiting: My Lords, latest Eurostat figures show that in 2000 the UK had 52.9 per cent of the stock of foreign direct investment from outside the European Union. That was a drop of 2.1 percentage points on 1999. We do not have more recent comparable figures as other countries in Europe are not as prompt as we are in delivering their figures.
	Ernst & Young's project-based figures for 2002 make it clear that the UK continues to attract more investment than any other country except for the US. The Government are determined to see the UK retain its position as No. 1 in Europe and will continue to pursue economic policies that will ensure that.

Lord Watson of Richmond: My Lords, I am most grateful to the Minister for that reply, and congratulate him on his additional responsibilities. However, I am sure that he will confirm that one statistic brought to his attention was that published at the beginning of the month by the European Commission data office. It made it clear that, since the introduction of the euro-zone, our share of foreign investment from outside the European Union has declined from 48 per cent to 25 per cent. In the light of that startling and worrying trend, would he not confirm that any advocacy of ruling out membership of the euro-zone in perpetuity would be something of a suicide note?

Lord Evans of Temple Guiting: My Lords, I am grateful to the noble Lord for that question. I do not recognise the statistics that he gives. The statistics that I have from government sources and Ernst & Young paint a quite different picture. For example, the latest figures from the Office for National Statistics show that foreign direct investment stock in the UK in the fourth quarter of 2002 was at a record level of £396.2 billion, an increase of £15.6 billion, or 4 per cent, on the same quarter in 2001.
	The Government are confident that a successfully operating economic and monetary union, and UK membership of the euro on the right basis, would boost inward investment over the longer term. However, there is a risk that the longer the membership of the euro is delayed, the longer the potential gains in terms of increased inward investment are postponed.

Lord Lamont of Lerwick: My Lords, would it not be unfortunate if anyone attempted to talk down the British economy simply in order to try to make a case for the euro? Is it not the case that, for the past three years, Britain has had more foreign inward investment than either France or Germany? Even if our market share has declined—that would not be surprising as the figures are very volatile—it is certainly the case, as Patricia Hewitt said the other day, that Britain is and remains the No. 1 location in the EU for inward investment.

Lord Evans of Temple Guiting: My Lords, I am very grateful to a former Chancellor for paying tribute to the way in which the present Chancellor has looked after the British economy. I absolutely agree that no one should run down Britain's contribution, because we have done a most extraordinarily good job and will continue to do so.

Lord Lea of Crondall: My Lords, my noble friend said that he did not recognise the statistics cited by the noble Lord, Lord Watson, and implied that there might be some contradiction between them and those of Ernst & Young. From what has been said this afternoon, there is no contradiction, as one talked about total inward investment and the other about inward investment to the UK from outside the euro-zone. Is it not quite plausible to suppose that people outside the euro-zone would be increasingly worried about non-membership of the euro-zone by Britain, because they have double exchange rate jeopardy as they invest in Europe and, in particular, in Britain?

Lord Evans of Temple Guiting: My Lords, my noble friend makes a very good point. With sterling and the euro, if a big firm is interested in investing in the UK there is always the problem of coping with the exchange rate. As to his first point—that there may not be a contradiction between my statistics and those given by the noble Lord, Lord Watson—I shall have to look at those statistics afterwards.

Baroness Williams of Crosby: My Lords, further to the Question of my noble friend, his source is the Financial Times, which is widely recognised in this House and outside to be a wholly reputable newspaper.

Noble Lords: Oh!

Baroness Williams of Crosby: My Lords, if it is not so recognised by some Conservative Members, I think that the great spectrum of opinion in this country is that it is a newspaper that can be relied on. I am rather surprised that anyone should think otherwise.
	There was a considerable play on words, in that the absolute amount and the proportion are two different things. My noble friend pointed out that the proportion of foreign direct investment from outside the euro-zone and the European Union into Britain has just about halved. That is serious, even though the absolute figures may have increased. It is not to anyone's benefit to pretend that the facts are other than they are, and I thank the Minister for addressing the issue as he has tried to do.

Lord Evans of Temple Guiting: My Lords, I am not in any way pretending that matters are not as they seem. I merely say that I was presented with a set of statistics that are at variance with the material that I have been given.
	I am afraid that I do not agree totally about the Financial Times. A big article yesterday on regional selective assistance—that has a bearing on foreign investment in our country—had inflammatory headlines. On reading the text, one found that things were not quite as bad as the headlines suggested.
	I say again that I shall look at the statistics. I do not think that there is a great difference between my position and that of the noble Lord, Lord Watson; we are both basically on the same side.

Lord Peston: My Lords, will my noble friend really stick to his guns, which I take it are that the figures are extremely difficult to interpret and that it would be foolhardy to jump to any conclusions about something that happens in the very short term? However, does he agree—I speak as someone who would join the single currency—that the exchange rate question is beside the point? If an American firm is thinking of investing here, it is concerned about sterling against the dollar. If it is thinking of investing in France, it is concerned with the euro against the dollar. In both cases, there is an exchange rate risk. From that point of view, the exchange rate is neither here nor there.

Lord Evans of Temple Guiting: My Lords, the variance in statistics may have something to do with the difference between stock and flow, which is not a matter that we ought to get into this afternoon. Other than that, I agree with everything that my noble friend said.

Lord Saatchi: My Lords, speaking of figures that can be relied on, did not the Chancellor recently assess foreign investment and trade in his 18 studies? Did he not come to the conclusion that our trade could increase by 50 per cent if we joined the euro-zone? Will the Minister remind the House which particular currency unions the Chancellor studied to arrive at that conclusion? Were they not Angola and Mozambique, Burkina Faso and Chad, Vatican City and San Marino, and Tuvalu and Tonga?

Lord Evans of Temple Guiting: My Lords, I shall certainly not write to the noble Lord! That question is very wide of the Question on the Order Paper. We have here a great British success story. We attract massive inward investment. Every party should do everything it can to support that. What we should not do is to quibble over issues that are not relevant to the Question that I am answering.

Iraq: DfID Involvement

Lord Astor of Hever: asked Her Majesty's Government:
	How many officials from the Department for International Development are currently working in Iraq.

Baroness Amos: My Lords, the Department for International Development presently has 24 officials, including short-term consultants in Iraq. Nine are with the Coalition Provisional Authority in Baghdad. These include the new director of operations and advisers on food distribution, health, refugees, salary payments and infrastructure. In Basra, five are working with the Coalition Provisional Authority on economic management, legal affairs and governance; three are seconded to the UK military; and two are liaising with humanitarian agencies. DfID has also seconded seven consultants to support UN agencies, five of whom are currently stationed in Iraq.

Lord Astor of Hever: My Lords, I am grateful to the Secretary of State for providing the House with those figures. But aid agencies tell us that there are far too few people on the front line. Considering that they also say that co-ordination between DfID, the MoD and the Coalition Provisional Authority is so poor, why are there not more DfID officials there? Will the noble Baroness explain why so little forethought was put into planning for the collapse of civilian authority in Iraq?

Baroness Amos: My Lords, I do not accept what the noble Lord has said. We have individuals who are working with the CPA and who are co-ordinating between ourselves, the MoD and the FCO; we have had officials in Basra who are located with the UK military; and we have put substantial resources into the United Nations, the World Food Programme, UNICEF and other UN organisations, and into NGOs which are working on the ground. When noble Lords see work being done in Iraq—when they see water supplies being fixed and electricity being supplied—that is done with British money through DfID.

Lord Campbell-Savours: My Lords, is not one of the greatest incentives to departmental officials—but in particular to departmentally sponsored NGO involvement in Iraq—the very high cost of life insurance for people who go on to the front line, which often runs into thousands of pounds per person per week? Is my noble friend prepared to ask officials in her department to consider, without any prior commitment, the establishment of a scheme whereby the Government act as the insurer of last resort—because this problem is acting as a major disincentive to NGO involvement?

Baroness Amos: My Lords, I agree with my noble friend that the question of insurance has been a problem for some NGOs; indeed, it was a problem for some contractors used by the Department for International Development. We sent security staff out to Iraq. We put together our own safety regulations, which have helped us in this instance. But I recognise the problem that my noble friend has raised and I am happy to take it away and re-examine it.

Baroness Northover: My Lords, is the Minister aware that a senior British official is reported as saying that the US-led administration in Iraq is:
	"the single most chaotic organisation I have ever worked for"?
	What advice are the Government giving to their coalition partners on the reconstruction of Iraq?

Baroness Amos: My Lords, noble Lords will be aware that there have been some problems with the administration in respect of the CPA, particularly in Baghdad. I have addressed these questions in the House previously. The question of safety and security is particularly problematic and is hampering not only CPA efforts but the efforts of the UN and NGOs on the ground. It is a matter that we have to address with a great deal of urgency. Noble Lords are perhaps aware of the latest reports on television and radio regarding the possibility of a further attack on our own forces just north of Basra. So the situation is extraordinarily serious and is holding up the reconstruction effort. We are putting a great deal of effort into this. In addition to staff from DfID, staff from other government departments are working with colleagues in the CPA and with Iraqis in the department there.

Baroness Rawlings: My Lords, following the Secretary of State's Answer to my noble friend Lord Astor of Hever, if it is safe enough for 24 officials from DfID to be in Iraq, when does she plan to visit Iraq?

Baroness Amos: My Lords, I plan to visit Iraq as soon as possible. Noble Lords will know that I had planned a visit last week, but the security advice that I received in respect of a high-profile visit was to the effect that I should not go. I will go there as soon as I can; and, of course, we have kept the security of our own staff under constant review.

Lord Wright of Richmond: My Lords, will the Minister confirm that the apparent decision to exclude all former members of the Iraqi Ba'ath party, however junior, from working is not only causing unemployment to a very serious extent in Iraq but is excluding from the reconstruction process a number of highly qualified people who would be very ready to undertake those tasks?

Baroness Amos: My Lords, the de-Ba'athification process is under constant discussion. No decisions have yet been taken. There was a concern that the first three levels should perhaps be excluded. The implications of that in terms of the administration in Iraq is being looked at. What we want to see is Iraqis working to reconstruct the country. They have the skills—they need the resources from us to assist them in doing that, but the skills exist within the country.

Lord Forsyth of Drumlean: My Lords, in answer to my Question yesterday, the noble Lord, Lord Bach, said that the Government were not aware of any cases of radiation sickness among civilians in Iraq. Imagine my surprise to hear on the "Today" programme this morning a report that every day five such cases involving children are being discovered in the south of Baghdad, due to people looting dangerous nuclear material. Does the Minister think that she has enough people in Iraq to know exactly what is going on? This would appear to have serious implications for our security as well as for the security of people living in Iraq.

Baroness Amos: My Lords, perhaps I have not made myself clear. The information that we have about what is going on in Iraq comes not only from DfID staff; it comes from those organisations that have a great deal of experience—far longer experience than we have—in that they have worked there for many years. We have currently given funding of some £115 million to different NGOs which are working on the ground, including UN organisations, UNICEF, MSF, the ICRC and other organisations on the ground.
	As regards the issue of radiation sickness, there is a BBC report about the nuclear facility that focuses on accounts of the local population in the area having looted drums and containers from the site, emptying low-enriched uranium from them and taking the containers to use for water storage. However, the World Health Organisation has not received any report of suspected radiation sickness in the local hospitals. It did receive reports of the local population's possible exposure to risk. The World Health Organisation is examining the matter. It is best placed to look at it. When I have any further information, I shall be happy to write to the noble Lord.

Baroness Nicholson of Winterbourne: My Lords—

Lord Williams of Mostyn: My Lords, I am so sorry, but I am afraid that we are over time.

EU Council of Ministers: President

Lord Howell of Guildford: asked Her Majesty's Government:
	What discussions they have had with the governments of the 10 European Union accession states about the proposal to create the post of a full-time President of the European Union Council of Ministers.

Baroness Symons of Vernham Dean: My Lords, Her Majesty's Government have held discussions with all the EU accession countries, as well as with existing member states, on the proposals for a full-time Council chair. The Government support these proposals, which would give the Council's work greater continuity and coherence. Heads of government of member states and accession countries will further examine these proposals, and others put forward in the draft constitutional treaty, at an intergovernmental conference later this year.

Lord Howell of Guildford: My Lords, I am grateful to the Minister for that reply. But does she realise that, although many of these small countries, particularly the new applicants, accept the need for a longer rotation of the presidency, they regard the idea of a full-time President of the Council, elected or chosen behind closed doors—a kind of new "Mr Europe" or "Ms Europe"—as a huge mistake? Does she recall that these smaller countries used to regard Britain as their champion and friend but now one hears them saying that we are siding with the big boys in a Europe which will be less equal and less congenial to the smaller nations? Is that really what we want?

Baroness Symons of Vernham Dean: My Lords, I should point out that I do not believe that concern is limited only to accession countries. The fact is that many of the small countries have concerns about this matter and we understand those concerns. But Her Majesty's Government believe that the proposals for a full-time chair are not the recipe for big state domination which some of the smaller countries fear they are. The chair is designed to add coherence and continuity and not to lock in the interests of any particular member state or states.

Lord Renton: My Lords, is the noble Baroness aware that the larger the European Union becomes and the more countries it contains, the less well will integration work and the more hardship could arise from each country having no control over its own currency?

Baroness Symons of Vernham Dean: My Lords, we are considering the possibility of a presidency. Perhaps I may try to concentrate my responses on how that presidency will operate in relation to smaller countries. The current system was created when there were only six countries in the European Community. The fact is that it is already creaking under the strain of the current number of members. Many countries believe that the current system will become unworkable with the much hoped-for expansion of the European Union. For that reason among others—coherence and continuity, which we believe are so important—we have supported these proposals.

Lord Maclennan of Rogart: My Lords, does the Minister accept that there is no difference in interest between accession countries and existing member countries in seeing the strategic plans of the European Union properly drawn up and carried forward from one period of six months to another and that, in any event, with the rotation that would exist between 25 member states, no country would have a day in the sun very frequently? Does she also accept that what is important is effectiveness in chairing the presidency and in ensuring that representation of all member countries is achieved in other ways?

Baroness Symons of Vernham Dean: My Lords, I agree with that almost entirely. I believe that the noble Lord, Lord Maclennan, who, after all, has had the opportunity to consider these matters rather more closely than some of us, expresses it very well when he says that this issue is not about a day in the sun for a particular country. I stress that we are already working under a strain with 15 member states and, if we do not make some changes, we shall be under even greater pressure in trying to work effectively with an EU of 25 members.
	I believe we must consider what the Council chair would do in driving forward the work, in ensuring proper preparation and continuity on the basis of the General Affairs Council, and in presenting a report to the European Parliament after each meeting of the European Council. Much in these proposals is positive. I say to the noble Lord, Lord Howell, that I believe this is a crucial point. It is an issue that will benefit all countries in the European Union and will not bring about a division between accession countries and those who are already in the Union or a division between the big and small countries.

Lord Pearson of Rannoch: My Lords, can the Minister explain to your Lordships how the cause of democracy will be advanced by this proposal? By "democracy", of course, I mean the interests and will of the people of Europe as opposed to their governments, bureaucracies and so on.

Baroness Symons of Vernham Dean: My Lords, I did not think the noble Lord, Lord Pearson of Rannoch, believed that the current position was serving the purposes of democracy that well. I am interested to know that he now seems to imply that we are not doing that badly if we do not need this type of change.
	However, perhaps I may take him up on the point about why this arrangement would be better. We believe it would be better because at present we are chopping and changing every six months. The fact is that the work of the European Union comes to a halt as we go through a handover period. We are going through one such period at the moment in the changeover between the Greek and Italian presidencies. The whole point of considering a President or a chair of the Council is to ensure a carrying-forward of the will of the European Union. The preparation and continuity of that work would be enormously important and I believe that, with better representation in that way, the purposes of democracy would be well served.

Lord Stoddart of Swindon: My Lords, is the noble Baroness aware that, in light of what she and the noble Lord, Lord Maclennan, said about the new chairman—I believe that that is what was contained in the report to Parliament yesterday—or President or whatever one cares to call it, there seems to be some difference of view on the matter? It would not simply be a job which entails preparing and carrying forward the agenda but, as the Prime Minister said in Cardiff, the President of the Council would be a man or woman speaking for the European Union on the world stage. The new President of Europe would be able to speak directly on the telephone or otherwise to the President of the Union States. The job seems to be far bigger than preparing an agenda and carrying it forward.

Baroness Symons of Vernham Dean: My Lords, of course there would be a role for any chairman or President, and there is an interesting discussion about the nomenclature that we are using here. We have said "chairman". I understand that there is no French equivalent of that; the French have used the word "president", and there may be some interesting discussions around that. But the noble Lord is right: one of the functions envisaged for the Council chair is to ensure external representation of the Union but without prejudice to the responsibilities of the Commission President and the putative Minister for Foreign Affairs.
	The important point about these proposals is that we do not want to unbalance the institutional architecture. All the institutions—the Commission, the Council, the European Parliament and the Court of Justice—need to be strengthened. They have all been considered during the course of the work that the noble Lord, Lord Maclennan, and our other colleagues—notably, the noble Lord, Lord Tomlinson—have been undertaking on our behalf. I very much look forward to discussing them in due course when we come to debate the IGC.

Taxation and Higher Incomes

Baroness Miller of Hendon: asked Her Majesty's Government:
	Whether they have plans to increase taxation of people on higher incomes and, if so, at what level of income would it apply.

Lord McIntosh of Haringey: My Lords, the Government have committed themselves not to increase the basic or top rates of income tax within the lifetime of this Parliament.

Baroness Miller of Hendon: My Lords, I thank the Minister for what is not really an unsurprising reply. Is it not a fact that since 1997 the tax burden has risen by £118 billion, which includes a 1 per cent rise on income tax, thinly disguised as a rise on national insurance? Given that that is already a huge tax hike, does the Minister agree that his right honourable friend the Chancellor of the Exchequer needs no lessons at all from Peter Hain on how to pick the taxpayer's pocket? Perhaps he does not agree with that and believes that there is more yet for the Chancellor to learn.

Lord McIntosh of Haringey: My Lords, the figure that the noble Baroness, Lady Miller, gives, as she knows perfectly well because she is well instructed in these matters, is meaningless. Perhaps I may set out the position correctly. For the family of a single earner on average earnings, with two children, the effective rate of tax is 20.1 per cent compared with 20.9 per cent in 1997 and is in fact the lowest figure since 1979–80. If we consider the effective, as opposed to the marginal, rate of taxation and take into account the effect of tax credits, we have a progressive tax system in which the burden is one of the lowest in the developed countries in the world.

Lord Barnett: My Lords, does not the noble Baroness raise an important point, not least in her supplementary question and, if I may anticipate it, that of the noble Lord, Lord Saatchi? It exposes how impossible it is to have a serious debate on an important issue of taxation. But even worse, as I am sure my noble friend will agree, was the attitude of my right honourable friends the Prime Minister and the Chancellor of the Exchequer. It was quite intolerable to stop our right honourable friend Peter Hain even raising the issue, no matter how lacking he was in understanding the tax system. Does my noble friend accept that? He might even be promoted if he agrees.

Lord McIntosh of Haringey: My Lords, the answer is that which I gave at the outset. The Government have committed themselves not to increase the basic or top rates of income tax within the lifetime of this Parliament. Given that, discussion of tax rates is always worth while and valuable.

Lord Blackwell: My Lords, will the Minister confirm that the figures he quoted exclude national insurance, which rose in the previous Budget? Will he say whether the pledge not to raise higher rates of taxation also applies to national insurance rates?

Lord McIntosh of Haringey: My Lords, the noble Lord, Lord Blackwell, who is also well informed in these matters, knows perfectly well that the rise in national insurance to pay for extra expenditure in the health service follows very sound principles laid down by Beveridge in the 1940s. They are that those who are earning should pay for the health service, which is provided for those who are earning and those who are in retirement.

Lord Corbett of Castle Vale: My Lords, can my noble friend confirm that in the government led by the then Mrs Thatcher from 1979 for the next nine years the top rate of tax was 60 per cent and the marginal rate was 90 per cent?

Lord McIntosh of Haringey: My Lords, there were a number of different top rates of tax under the Thatcher and Major governments. I do not believe that I should be called on to summarise them in the context of Starred Questions.

Lord Newby: My Lords, we on these Benches agree with the Minister that there is great value in having a debate about the appropriate level of taxation. Does he accept that as a starting point for such a debate the Government might care to point out that if income tax were introduced at the rate of 50 per cent for all incomes over £100,000, that would raise £4.5 billion additional resources which might be used, for example, to scrap student fees, increase the basic pension or provide free care for the elderly? I inform the Minister that we on these Benches look forward to fighting the next election on that basis.

Lord McIntosh of Haringey: My Lords, the Liberal Democrat Party has been spending the extra money from a 50 per cent rate on incomes over £100,000 in different ways over the past few months and years. Only last week, we were told by those on the Liberal Democrat Front Bench in another place that it would be used to reduce council tax. I should be interested to see how the noble Lord, Lord Newby, squares that with his proposals today.

Lord Saatchi: My Lords, is the spectre of higher income tax just the good news from the Chancellor? Does not the Chancellor actually plan new capital gains tax on houses, a new wealth tax, higher stamp duty and higher VAT? All of those would help him to control our economy in the unlikely event that we joined the euro.

Lord McIntosh of Haringey: My Lords, I am glad that we on these Benches have resisted the temptation of anticipating the questions of the noble Lord, Lord Saatchi. He has a wider range of sources of irrelevant quotations than anyone else I have ever met. I am glad that he did not use them today. The noble Lord knows perfectly well that he is putting up an Aunt Sally. There are no plans to make the changes to which he refers.

Lord Harrison: My Lords, if the noble Lord, Lord Saatchi, says that that is so bad, why did the noble Lord, Lord Lamont, say that it was so good?

Lord McIntosh of Haringey: Well, my Lords, the noble Lord, Lord Lamont, has experience as a former Chancellor of the Exchequer, and his judgment on this matter and on this occasion was very sound.

Lord Marlesford: My Lords, if I congratulate the present Chancellor of the Exchequer on so bravely and wisely sticking to a top rate of 40 per cent tax, will the Minister join me in congratulating a previous Chancellor of the Exchequer, Nigel Lawson, on introducing the top rate of tax in 1988? Was the Minister as surprised as I was when he gave me a Written Answer last year which said that if the top 98 per cent rate in force when Mrs Thatcher took over the government were applied at today's price level it would cut in at a marginal income of £76,000 a year?

Lord McIntosh of Haringey: My Lords, I do not believe that I could have been surprised by the Answer I gave to the noble Lord, Lord Marlesford. I must at least have read it first, even if I did not actually write it. However, the lesson from the past six years is surely that because of the Chancellor's success at management of the economy there are far more people in all of those higher income earnings brackets. For example, in 1997 only 100,000 people were earning more than £100,000 a year; now more than 400,000 do so. We should not merely consider their income in that regard; we should also refer to their wealth, including their housing wealth, which has increased by 40 per cent in the past six years. All of that makes marginal quibblings about what is called the "tax burden" appear rather irrelevant.

Criminal Justice Bill

Baroness Scotland of Asthal: My Lords, I beg to move the Motion standing in my name on the Order Paper.
	Moved, That it be an instruction to the Committee of the Whole House to whom the Criminal Justice Bill has been committed that they consider the Bill in the following order:
	Clauses 1 to 10, Schedule 1, Clauses 11 to 27, Schedule 2, Clauses 28 to 39, Schedule 3, Clauses 40 to 69, Schedule 4, Clauses 70 to 106, Schedule 5, Clauses 107 to 128, Schedule 6, Clauses 129 to 172, Schedule 7, Clause 173, Schedule 8, Clauses 174 to 180, Schedule 9, Clauses 181 to 185, Schedule 10, Clauses 186 to 210, Schedule 11, Clauses 211 to 215, Schedule 12, Clauses 216 to 220, Schedules 13 and 14, Clause 221, Schedule 15, Clauses 222 to 230, Schedule 16, Clauses 231 to 254, Schedule 17, Clauses 255 to 261, Schedule 18, Clauses 262 and 263, Schedule 19, Clause 264, Schedule 20, Clause 265, Schedules 21 and 22, Clauses 266 to 268, Schedule 23, Clause 269, Schedule 24, Clauses 270 to 278, Schedule 25, Clauses 279 to 282, Schedule 26, Clauses 283 to 291, Schedule 27, Clauses 292 to 294, Schedule 28, Clauses 295 to 298, Schedule 29, Clauses 299 and 300, Schedule 30, Clause 301, Schedule 31, Clause 302, Schedule 32, Clauses 303 to 307.—(Baroness Scotland of Asthal.)

On Question, Motion agreed to.

Royal Security: Windsor Castle

Baroness Scotland of Asthal: My Lords, with the leave of the House, I shall now repeat a Statement made in another place. The Statement was as follows:
	"With permission, Mr Speaker, I wish to make a Statement on the serious breach of security at Windsor Castle last Saturday evening, 21st June.
	"The Metropolitan Commissioner has already apologised personally to the Royal Family and, on behalf of the Government and this House, I too offer my deep regret to Her Majesty and the Royal Family for the events of Saturday evening.
	"Yesterday afternoon I received a six-page report from the commissioner. This is a preliminary report which I have discussed with the commissioner this morning. A further detailed review has already been set in train. However, it may help the House if I summarise the chronology of events in the report.
	"At 8 p.m., Aaron Barschak appeared at the main entrance of Windsor Castle. He was refused entry by the police and, following an impromptu public comic turn, was asked to move on.
	"At about 10 p.m., Mr Barschak entered the castle grounds at Chapter Mews. He climbed a steep bank, scaled a tree and leapt across on to a castle wall. From here he climbed to the North Terrace.
	"As he advanced along the North Terrace he was challenged by a contractor. By this time he had changed into fancy dress. He presented as being slightly drunk and said that he was a party guest who was lost. The contractor escorted him to one of the side entrances to the castle where a police officer was on duty. The police officer, who had to remain at his post, asked the contractor to take Mr Barschak to the main entrance to the party.
	"There was no further challenge from either the police or other staff controlling access to the party. Mr Barschak was able to get unacceptably close to Prince William.
	"Having appeared at the Prince's side, he then made his way to the bar, where a member of the castle staff challenged him. He was handed over to the police. Following interview and investigation by the police, which is still continuing, Mr Barschak was released on bail.
	"I am sure that the House will appreciate that I have to ensure that my comments on this incident do not prejudice any possible police action against him. Nevertheless, Mr Barschak's actions have exposed an appalling failure in the security at Windsor Castle which simply should not have happened. I know that the Commissioner of the Metropolitan Police agrees with this.
	"I am determined that lessons should be learned from this incident. A detailed police inquiry is being conducted by a senior officer, Commander Frank Armstrong of the City of London Police. The report of that investigation will determine conclusively what went wrong on the night, and whether disciplinary action needs to be taken.
	"This report will be available within the next four weeks and it is my intention, in consultation with Sir John Stevens, to publish the report. But neither the police nor I are awaiting that report before considering what further security measures need to be taken. This is the subject of urgent work with the Royal Household by the Metropolitan Police and my officials.
	"My particular concern is that this very serious breach of security occurred despite extensive security and surveillance measures already in place at Windsor Castle. Further work has been carried out over the last few months and more is planned for the autumn. Security at all royal residences remains under constant review, but at this stage we have no reason to believe that there were any technical failures at Windsor on Saturday night.
	"Assistant Commissioner David Veness of the Metropolitan Police has made it clear that the events of Saturday night are wholly unacceptable, and I share that view. That is why, within the confines of the inquiry and possible further police action, I have sought to give the House a picture of the events of Saturday night.
	"I want to assure the House that by working together with the police and the Royal Household, lessons can be learned from this event which can only improve the security of the Royal Family for the future.
	"I know that the whole House will share this objective.".
	My Lords, that concludes the Statement.

Baroness Anelay of St Johns: My Lords, I thank the Minister for repeating the Statement made by her right honourable friend a short while ago in another place.
	This is indeed a matter of great concern. It is perhaps disappointing that the Home Secretary made certain statements to the press yesterday before Parliament had the opportunity to hear his views today. The Home Secretary was reported yesterday as saying that he does not have direct responsibility for specific police operations. I agree. But it is his job to ensure that they are able to co-ordinate security effectively.
	It is clear that the security systems themselves failed in a wholly unacceptable way. Indeed, the Home Secretary himself recognised in his response to Questions in another place today that there was a systemic failure. Our purpose in considering this Statement and the event to which it refers, should be to learn the lessons and improve the systems of protection, rather than to satisfy any political or administrative witch-hunt. What lessons have the Government learned about their own responsibilities for the future security of our Royal Family, and more generally of all of us?
	The Minister says that urgent work is now being undertaken and that a report will be published in about four weeks. That will be during the Summer Recess. Will the Government make arrangements for the House to debate this important report during the September spill-over period?

Lord Dholakia: My Lords, I also thank the Minister for repeating the Statement. I endorse almost all of the concerns expressed by the noble Baroness, Lady Anelay.
	Only a week ago I was attending a seminar of the Windsor Leadership Trust in Windsor Castle. I was impressed by the courtesy and kindness of the security and police staff in the way that they directed me to the place that I was attending. It was therefore a complete shock to hear what happened during Prince William's 21st birthday party. I share the concern expressed by the Home Secretary and the Prime Minister about the incident. One shudders to think, in the present days of high terrorist alert, what would have happened if it had been someone other than a foolish comedian.
	Concern has already been expressed by my colleagues in the other place. It is right for the Home Secretary to have ordered an urgent inquiry. Everybody—whatever their views—must understand the need for senior royals to have proper police protection. It is a relief that once again a breach of royal security resulted in no harm—but we can never be too careful. Equally, no matter how high and tough the security, there will from time to time be incidents of this type, and it is the duty of us all to ensure that we are all vigilant.
	We share the objectives that the Home Secretary has set out, and they have our full support. A detailed inquiry is continuing. It would be unwise to comment any further. We must await the recommendations.

Baroness Scotland of Asthal: My Lords, I thank the noble Lord, Lord Dholakia, and the noble Baroness, Lady Anelay, for the understanding and support that they have voiced in relation to this matter. Regarding the questions raised by the noble Baroness, we are doing everything that we can to learn the lessons from what happened on this occasion. It will be critical for us to establish the facts before we can make any informed judgment about them. It would be a matter for the usual channels to arrange a debate at an appropriate time, if that is the desire of the House. We shall do all that we can to ensure that the report is made available to Members of this House as soon as is reasonably practicable, so that everyone will have an opportunity to consider it.
	I particularly endorse the comments of the noble Lord, Lord Dholakia, about the need for individual vigilance, for a balanced response and to await the outcome. I thank the noble Lord for the sensitive way in which he responded to the Statement.

Baroness Carnegy of Lour: My Lords, noble Lords will be only too thankful that the reason for the incident turned out to be what it was. Of course the matter is serious. Is there not one lesson that we can learn, which is that perhaps prominent people, when they have a party, should not have it in fancy dress for the time being?

Baroness Scotland of Asthal: My Lords, the comment of the noble Baroness will be fully understood. It is important, but even prominent people occasionally like to have a little fun.

Lord Stoddart of Swindon: My Lords, the comment about fancy dress parties is apt. It is the ideal cover for any gatecrasher or terrorist.
	Does the Minister agree that we must not become paranoid about safety and action against terrorism? Given that the Royal Family wish to keep in touch with the people of this country, if we separate them so much from the population, if we become so paranoid that we frighten ourselves almost to death, we will be doing the terrorists' work for them. Please could we handle the problem with a degree of decorum and not let the matter become out of hand?

Baroness Scotland of Asthal: My Lords, perhaps I may reassure noble Lords that we agree with the importance of their comments. This is not a case of becoming paranoid, but it is critical that we take appropriately cautious action to make sure that the security arrangements are robust and effective. There are lessons to be learned and we are determined to learn them.

Lord Mackie of Benshie: My Lords, my noble friend the Minister said that we should all be vigilant. Indeed, I sometimes see extraordinarily peculiar people in this House—but when I investigate they always turn out to be Peers.

Baroness Scotland of Asthal: My Lords, I could not possibly comment.

Lord Swinfen: My Lords, could the Government arrange for our special forces to test the security at royal palaces, and then give a report to the security officials as to how they succeeded in getting in?

Baroness Scotland of Asthal: My Lords, it is a police operational matter. I am sure that when we have the report, every conceivable issue will be fully considered.

Lord Monson: My Lords, does the Minister agree that if our public figures, heaven forbid, behaved like eastern European, Latin American or Third World dictators and surrounded their houses and palaces with barbed wire, watchtowers and 24-hour floodlighting, after felling all the trees surrounding their palaces, then such incidents would be unlikely to occur—but at what a terrible cost? In a free country, a certain degree of risk is inevitable.

Baroness Scotland of Asthal: My Lords, it is a matter of balance. We are taking a balanced approach. We shall be able to put in place any additional measures, and I can assure noble Lords that we will show the usual British courage and flair.

Genetics

Lord Warner: My Lords, I would like to repeat a Statement which has been made by my right honourable friend the Secretary of State for Health in another place. The Statement is as follows:
	"With permission, Mr Speaker, I wish to make a Statement about the White Paper on genetics and healthcare that we are publishing today. The paper, Our Inheritance, Our Future—Realising the potential of genetics in the NHS, is available from the Vote Office.
	"Today's White Paper could not be published at a more appropriate time. This year marks the 50th anniversary of the publication by Francis Crick and James Watson of the structure of DNA. I begin by paying tribute to their work. DNA is the molecule of life from which our genes are made. The discovery of its double helix structure set the stage for 50 years of world-changing genetic advances. It has allowed scientists to decode the human genome and to identify and sequence all the 30,000 or so genes which each of us carry in every cell of our body. This gigantic task was completed earlier this year. The UK has played a leading role in this ambitious international project, with a third of the genome being mapped at the Wellcome Trust Sanger Institute in Cambridge.
	"Increasing understanding of genetics will bring more accurate diagnosis, more personalised prediction of risk, new gene-based drugs and therapies, and better targeted prevention and treatment.
	"In time we should be able to assess the risk an individual has of developing the country's biggest killers—cancer and coronary heart disease—as well as those like diabetes which limit people's lives. We will also learn more about how variations in our genes affect the way we respond to medicines. Further down the line, genetics will lead to the development of new therapies aimed not just at treating disease in novel ways but also at preventing it.
	"Thus genetics has the potential to bring immense benefits for patients. Above all, genetics promises a more personalised approach to healthcare with interventions tailored to each person's own genetic profile. This science therefore encourages us to develop the personalised NHS suitable for the 21st century that the Government are committed to creating.
	"Our vision is for the NHS to lead the world in taking maximum advantage of the safe, effective and ethical application of the new genetic knowledge and technologies for all patients as soon as they become available. This vision calls for an integrated strategy—a strategy that will support the generation of new knowledge and technologies; further develop centres of excellence in the NHS and facilitate the roll-out of genetics into all NHS services; and all within the context of a rigorous regulatory framework and greater public understanding and engagement. The White Paper sets out how this will be achieved.
	"I believe there is no other healthcare system in the world better placed to harness the potential of genetic advances than the National Health Service. The values on which the NHS is based—providing care for all free at the point of use on the basis of need, not the ability to pay—are uniquely suited to capturing the benefits of the genetics revolution. They provide a bulwark against the inequalities of private insurance-based health systems where the prospect of a "genetic superclass" of the well and insurable, and a "genetic underclass" of the unwell and uninsurable, unable to pay the premiums for medical care, is for many a very real threat.
	"Our NHS means that citizens in the UK can choose to take genetic tests free from the fear that should they test positive they face an enormous bill for treatment or insurance, or become priced out of care or cover altogether. Already in the United States of America, where 40 million people have no medical cover, developments in genetics have stirred precisely these concerns. As our understanding of genetics increases, the case for private health insurance as an alternative to the NHS weakens. Thus scientific advance increasingly underpins the moral values which have long lain at the heart of a national health service.
	"I am today announcing that over the next three years, the Government will invest an additional £50 million in England in developing genetics knowledge, skills and provision within the NHS. The White Paper that we are publishing today sets out detailed plans of how that money will be spent.
	"The first step is to boost the capacity of NHS genetics centres. We will spend £18 million on a major programme to upgrade genetics laboratories. And we will expand the specialist genetics workforce with initiatives and investment to increase the number of laboratory scientists and genetics counsellors.
	"For patients to gain the maximum benefits from genetics, genetics knowledge and technologies will need to permeate the whole of the NHS. We will spur the take-up of genetics by other specialties by spending over £7 million to support new genetics initiatives in primary care and mainstream NHS services such as cancer and CHD. And we will set up a new genetics education and training centre which will work with the professional bodies to ensure that all NHS healthcare staff receive appropriate education and training in genetics.
	"The White Paper also sets out our intention to fund further research to help convert genetic discoveries into improved patient care. We will invest £4 million in pharmacogenetic research on existing medicines and we will set up a new chair and university department in pharmacogenetics.
	"The most common inheritable single gene disorder in this country is cystic fibrosis. There are 7,500 children and young adults with this distressing condition in the UK. There is no cure and sufferers rarely survive beyond their twenties. We will provide a further £2.5 million over the next five years to help find a gene therapy cure for cystic fibrosis. And we will make available a further £3 million to support gene therapy research on other single gene disorders, and £4 million on gene therapy production facilities for NHS and other public sector researchers.
	"But realising the maximum health benefits of genetics will require more than just support and investment in NHS services and in research. It can only be achieved if breakthroughs by the scientific community are matched by public support and understanding in the wider community.
	"Against a background of great promise, we recognise that genetic advances bring very real ethical and social concerns. We are committed to providing positive safeguards to address those concerns. We have in place an integrated and robust system of regulation. We have already taken action by introducing a moratorium on the use of genetic test results by insurance companies. And we have passed legislation to ban human reproductive cloning—one of the few countries in the world to have done so.
	"Above all, the Government are committed to ensuring openness and transparency in genetic policy-making. In 1999, we set up the Human Genetics Commission. Last year the commission produced a major report on the use of personal genetic information. It identified the growing danger of DNA theft, whereby sensitive information about a person could be gained by stealing his DNA through, for example, discarded hair and then testing it without his knowledge or consent. The commission recommended that this should be illegal. I am able to announce today that the Government have accepted this recommendation. We will introduce legislation to make it an offence to test a person's DNA without his consent. The new offence will apply in all circumstances except as part of a person's medical treatment where consent is impossible to obtain, or the lawful use by police and courts.
	"A core ethical principle in HGC's report is that no one should be unfairly discriminated against on the basis of his genetic characteristics. The Government wholeheartedly endorse this principle. We accept the HGC's recommendation to review the evidence and consider the appropriate means of addressing concerns in this area.
	"By accepting these two key recommendations of the Human Genetics Commission, I hope that I have demonstrated the Government's willingness to engage in a genuine dialogue on genetics issues. We need not fear genetic advances if we debate the issues openly and put in place the proper public protections today.
	"We are standing on the threshold of a revolution in healthcare. By working together, by building on our strengths, by making the necessary investment and careful preparation now, I believe that genetics can deliver real and lasting benefits in health and healthcare for all of us.
	"I commend this White Paper to the House".
	My Lords, that concludes the Statement.

Earl Howe: My Lords, the Minister may well have lost count of the number of times he has been welcomed to his new post during the past few days. However, as this is the first opportunity I have had to make a contribution on that theme, I hope that he will allow me to offer my sincere congratulations to him on his appointment. I look forward to our future exchanges on health and social services policy issues, both in this Chamber and outside.
	I welcome the Statement. The importance of leading-edge science and its potential benefits to society cannot be emphasised enough. Politicians of all parties have a duty to trumpet those benefits—not least in the field of genetics and other biological research in which public understanding lags behind that of the specialists—at every legitimate opportunity. I say that because the Statement mentioned explicitly the need for public support and understanding of genetic research.
	I agree with the Government that transparency and openness are essential elements of the public debate. Without such openness, misinformation and anti-scientific reporting have a habit of gaining currency, and it is often difficult to then recapture a sense of balance in the popular media. One only has to think of the debate on genetically modified crops and foods to see how true that is.
	Apart from that general situation, the work being done by the Sanger Institute through the good offices of the MRC and the Wellcome Trust depends on the recruitment of large numbers of people to donate samples and provide data for the biomedical collection that is being assembled. That collection will be needed to convert a huge amount of raw genetic code into potentially useful applications. In that context, I hope the Minister will agree that the choice of phraseology and language used to describe the procedures employed in research of this kind is of no little importance.
	I welcome the new money earmarked for research—especially for research into cystic fibrosis and pharmacogenetics—and for investing in the provision of genetics knowledge within the NHS. It would be helpful to hear a little more about how the Government envisage the delivery of services at PCT level, not only from a clinical standpoint as new diagnostic techniques become available, but in terms of counselling and advice to patients. We will shortly have a nationwide ICAS service. Do the Government intend to incorporate this rather different kind of counselling and advocacy into the services offered by ICAS, or will delivery be achieved in another way?
	I also welcome the Government's intention to stem all forms of unfair discrimination, and to prohibit DNA theft. We, for our part, will look constructively on any related legislation that the Government bring forward. However, we need to take great care before allowing access by the police to scientific data collected through scientific research. Also, we must examine carefully issues of patient consent. Can the Minister expand on that matter? Might he add some further comments about the Government's approach to the insurance industry and the regulation of insurance? I refer not only to health insurance, but to general life insurance and pensions.
	Are the Government committed in principle to securing an extension to the moratorium agreed with the industry some time ago?
	Great as the potential benefits are of this technology, there is a danger that they may be overhyped too early. I hope the Minister will agree that it is the responsibility of Ministers and others in public positions to carry the public along with the science—at a pace commensurate with its actual progress.

Lord Clement-Jones: My Lords, I too welcome the Minister's reading of the Statement in another place. This will be a very good day for those families who have genetic predispositions and genetic disabilities and diseases such as cystic fibrosis and epilepsy. I agree that this paper is an extremely useful step forward; not only in terms of the additional resources that have been pledged by the Government, but also in terms of the imaginative and comprehensive way in which it plans to integrate developments in genetics into the health service.
	An interesting point made in another place earlier today and again in the Statement was that the moral values of the NHS in terms of social insurance are underpinned more than ever by advances in genetics. Many of us are concerned about the interface between genetic testing and private health insurance, and about the futures of those who cannot obtain private health insurance simply because of their predispositions and genetic make-up. The NHS is particularly important in underpinning that social insurance aspect which now comes to the fore and which will spread the risks.
	That leads me to the question of the moratorium on genetic testing by insurance companies. It is very important that—at the very least—that should continue. We have had several discussions in the House about aspects of genetic testing, but we would like to see legislation. The Government have mentioned several areas for legislation in the White Paper, but they do not specifically say that they will legislate to prevent insurance companies insisting on genetic testing. A voluntary agreement only goes so far; it is not an adequate safeguard on a matter of such importance.
	There are issues about treatments that are developed using genetic technology and know-how. For instance, how will NICE appraise those new treatments? Will NICE have the capacity to do that? Conventional treatments take up enough of NICE's resources, and clinicians, patients groups and others invariably show great impatience when NICE cannot deal quickly enough with that work.
	I should again point out to the Minister that those with genetic conditions do not automatically qualify for free prescription charges, as do many other sufferers of chronic conditions. In tackling these genetic conditions, we should recognise that their treatment can be extremely expensive. We should alter the NHS rules and allow free medicines in those circumstances.
	We on these Benches agree with the proposed controls on the supply of genetic tests to the public, as proposed by the Human Genetics Commission. We have passed comment before on the biobank project; we welcome the sampling and research that is to be done, but are concerned at the proportion of the MRC's funding devoted to it. I hope that the project can proceed—but without crippling the MRC's capacity in other fields.
	We also agree with the proposals for the use of genetic information. That is an incredibly important new aspect of human rights, and it should be legislated for in the manner proposed.
	Echoing an aspect of what the noble Earl, Lord Howe, said, it is extremely important that the public take on board and understand the developments and the way in which the Government propose to mainstream genetic treatments and developments. It is also important that they understand that the progress that we can make must genuinely go through, not just the experts in the NHS, but also through other clinical staff. There are also the patient and public involvement processes that have been set up over the past year and the fact that there will be a great many questions about the use of genetic information, genetic sampling and so on. They need to be fully prepared for that because the last thing we want in the middle of progress is any public apprehension about such technology.

Lord Warner: My Lords, I thank noble Lords for their supportive remarks. I reassure noble Lords that I cannot be welcomed here too often. We agree entirely with the point made about not over-hyping the matter. It has to be taken forward in a balanced way, taking the public and healthcare professionals with us.
	On patient consent, it is clear that we are responding to the Human Genetics Commission's concerns that people should not be tested without their consent. We shall explore the detail of how that legislation is put into effect. The issue relating to understandable concerns about taking care over access by the police to such information can be dealt with in that context.
	On the insurance industry point, the position is that we negotiated a five-year moratorium on the use of genetic test results by the insurance companies. We are only part way through that period and we shall want to discuss with the industry, through the Government's genetics and insurance committee, and with other stakeholders how we formulate and agree a longer-term policy. I do not believe that any prior decisions have been made about that. It can be taken forward on a consultative basis with the industry.
	On Biobank, we shall be able to proceed comfortably without crippling the MRC in its work. The resources are being provided to take forward Biobank.
	The position on NICE is that areas of new procedures and testing in connection with genetics will be treated like any other new procedures in the NHS. If NICE is involved at an appropriate point in reviewing that area, we would need to ensure that the capacity was there to handle that as the need arises.
	The noble Earl, Lord Howe, raised workforce issues in primary care. There is a big education issue with GPs and their staff to bring everyone up to speed and to keep them up to speed in what is a fast-changing area.
	On the specifics concerning counsellors, when the detail of the White Paper can be taken forward, we shall increase significantly the number of genetics counsellors. Over the past year the department has provided start-up funding for 28 new posts and we are funding additional posts on the new MSc course in genetic counselling at Manchester and Cardiff. We are also funding a new scheme of structured training posts for people from a variety of healthcare backgrounds to train as genetics counsellors. We shall try to take the matter forward as fast as we can.

Lord Jenkin of Roding: My Lords, perhaps I may draw the Minister's attention—if that has not happened already—to the report of the Select Committee on Science and Technology of this House, on which I had the honour to serve when the committee inquired into human genetic databases, under the chairmanship of the noble Lord, Lord Oxburgh. One subject that the noble Lord, Lord Warner, has not mentioned in the Statement—it may be in the White Paper but I have not had time to study that—is the capacity of NHS ICT systems and computer technology systems to handle what will be huge volumes of immensely complicated data.
	Does the Minister recognise that the Select Committee doubted the capacity of the health service to be able to commission and to manage the quantum leap in the provision of ICT services necessary if the potential of the genetics revolution is to be achieved, as the Statement has foreshadowed? Is there not a risk—I put it no higher than that—of the health service failing, as has happened in the past with NHS computer systems, to be able to match the discoveries of the scientists and their application by the doctors with the ability to process and to store the vast volumes of information that will be required? That could lead to the kind of disappointment that noble Lords on all sides of the House would want to do everything possible to avoid.

Lord Warner: My Lords, I hope I can be forgiven for saying that in my short time in office I have not read every Select Committee report, including the one to which the noble Lord has referred. It is on my list of homework to be undertaken as quickly as possible.
	In terms of IT, the noble Lord will know that the Government have an ambitious strategy for improving IT in the NHS and have strengthened considerably its strategic and project management capability in that area. He is right to identify the risks. There are considerable risks in this area and they will need to be taken forward in taking forward the Government's IT strategy.

Lord Turnberg: My Lords, the report will be welcomed by the genetics community. I have to express an interest as chairman of the panel that advised the Government on the background to the report, so I would say that, wouldn't I? I hope that the wider public will welcome the report which will undoubtedly help to prepare the NHS to take advantage of the enormous advances in medical genetics that will come about. One of the keys to success in this area will be more and better education for all doctors, especially GPs, for nurses, for genetic counsellors and for a range of other healthcare workers and above all for the public. Is my noble friend aware of how much the report's emphasis on education is welcomed by everyone involved?

Lord Warner: My Lords, I want to put on record the Government's appreciation for the work undertaken by the noble Lord in chairing the advisory panel that contributed so much to the White Paper and for his support in this area. He is right that we need to work hard to put in place the training, to give people working in the NHS the confidence to grapple with the new agenda and to feel competent and confident about handling the issues.

Lord Maclennan of Rogart: My Lords, will the Minister say how the Government intend to ensure that genetics knowledge is not concealed by those who seek commercially to exploit it from those who may further advance medical research by its use on the spurious grounds of seeking to protect intellectual property? That concern has been expressed at senior levels in the scientific community, not so much about practices in this country as in the United States. Will he and the Government engage in discussions internationally about ensuring the continuing availability of such genetics knowledge?

Lord Warner: My Lords, that is an issue, but it is important to remember that patents provide an incentive to innovation. Without them industry and other inventors would be less likely to undertake some significant risks involved in investment and research to bring new healthcare products to market. There is a balance to be struck. There are safeguards in the patent system—many noble Lords will know about that in the area of Crown use—which enable the NHS to use patented inventions for an appropriate fee if the patent holder is unwilling to agree a reasonable deal. There are safeguards in the provision. The noble Lord is right to identify that as an issue, but equally there are strong protections for the Government to enable knowledge to be used for the benefits of patients in the NHS.

Baroness Carnegy of Lour: My Lords, as a previous chairman of a local research ethics committee, I would like to make a serious point. The Statement began, presumably to warm the cockles of the hearts of some of the Members of Parliament sitting behind his right honourable friend in another place, with a highly political point about the NHS. It went on to be serious about what the Government are going to do, and I welcome everything that was said.
	I suggest to the noble Lord, and through him his right honourable friends, that it seems important to concentrate, in trying to persuade the public—considering all the policy issues involved—to keep clear of controversial politics. This should be talked about as a scientific matter and as a matter of public policy in a way that everyone can accept and understand. It should not be linked to what we now call political spinning. If that is attempted, it will put people off the whole notion.
	The Government are entering a minefield of difficulty both in policy and in creating public understanding. I am sure that if they could avoid party politics, and stick to the science, they would get on much better. It is a serious point, as I experienced at local level some years ago.

Lord Warner: My Lords, I am always willing to act as a conduit between this House and my right honourable friend the Secretary of State for Health. I shall of course do so in this case. It is worth bearing in mind that my noble friend was trying to make the point that people are often concerned about these issues and whether they will be left behind. It is important to stress that the characteristics of the NHS provide reassurances that there will not be a genetic underclass as we take forward this exciting but still difficult and complex area of development in healthcare and medicine.

Lord Soulsby of Swaffham Prior: My Lords, I am sure that the whole House will be glad of this positive government statement. It coincides with the celebration of 50 years of DNA at the Wellcome Trust Sanger Institute next week. It is a good time to make the announcement. It is a good announcement among the many negative comments that one hears about genetic research. I hope that the Statement will put to flight many of the people who speak against it. I hope that the Minister will adumbrate further statements on behalf of Her Majesty's Government for support of genetic research and the use of genetics in medical treatment and development.
	Perhaps this is not the most appropriate question for the Minister, given the medical side. Is this an indication of the Government's general support of an intention to foster genetic research in general across medicine, agriculture and horticulture, where so many of us appreciate the great value of genetic knowledge and the application of this knowledge across the whole field of life on earth?

Lord Warner: My Lords, I thank the noble Lord for his support in this area. I do not want to stray into agriculture and horticulture, but noble Lords can assume from what we have said today that the Government fully support taking the benefits of genetic knowledge as far as possible in the interests of patients through medicine.

Water Bill [HL]

Lord Whitty: My Lords, I beg to move that the Bill be now further considered on Report. In doing so, with the leave of the House, I draw attention to the Motion on the Order Paper, which we will take at the end of the Report stage, that deals with recommitment of this Bill on one particular subject, namely that of fluoridation.
	Moved, That the Bill be further considered on Report.—(Lord Whitty.)

On Question, Motion agreed to.

Baroness Miller of Chilthorne Domer: moved Amendment No. 36:
	Before Clause 28, insert the following new clause—
	"General provisions with respect to water
	In section 6(2)(b) of the Environment Act 1995 (c. 25), at end insert "in particular the efficient use of water by all abstractors"."

Baroness Miller of Chilthorne Domer: My Lords, this group of three amendments, two of ours and one of the Government's, shows how we are struggling to find the most appropriate way of enabling the Environment Agency to have a firm empowerment to require the efficient use of water. The difference between the three amendments is small, but it will perhaps help the House if I explain. The Government may then be interested to consider the best way forward. The Government seem to prefer their wording, "including the efficient use". I am worried that unless we say "in particular the efficient use", we will have watered down the spirit of what we are all trying to achieve.
	Earlier, in Committee and at Report stage, noble Lords time and again came back to the importance of ensuring that the Environment Agency has this power. For the benefit of those noble Lords who have not been able to attend, I remind the House that the National Water Demand Management Centre points out that world water availability is 6,918 cubic metres per capita in general in the world. In Europe it is 8,547 cubic metres, and in Ethiopia 1,771 cubic metres. In the UK it goes down to 1,219 cubic metres and in the Thames basin just 265 cubic metres. Efficient use of water is essential with household growth and population growth. There is an important need to get this small clause absolutely right in the Bill and enable the Environment Agency to have exactly the right power.
	The government amendment could lead to some confusion. It talks of "including the efficient use of those resources". It would be better to say "in particular the efficient use of resources", to emphasise that the Environment Agency has an existing duty. "Including" might imply that the duty relating to the efficient use of resources was a new one. My Amendment No. 36 is probably weaker than what the Government have come back with in that it refers to all use of water and not just abstractors' use of water. Of this group, my preferred amendment now is Amendment No. 160A, but I welcome the views of other noble Lords, and of course the Government, on the best way to proceed. I beg to move.

Baroness Byford: My Lords, I support the noble Baroness, Lady Miller of Chilthorne Domer. Throughout our discussions in Committee, we have returned to the crucial factor of wanting to have efficient use and conservation of water throughout the Bill. I shall not repeat what I said then except to encourage those who were unable to take part at Committee stage to support through these amendments a basic principle that we would all wish to see encompassed in the Bill.

Lord Whitty: My Lords, I think that we are all agreed on what we want to achieve here. As tabled, Amendment No. 36 might have the effect of narrowing the scope of the existing general duty. It might narrow the scope of the duty to secure proper use of water resources to relate only to abstractors to the exclusion of other users.
	On the face of it, Amendments Nos. 160 and 160A are not very different. My interpretation of the difference is almost the opposite of the noble Baroness's. We emphasise that the Environment Agency has always been able to impose efficiency conditions, and has done so. We do not wish to include in the Bill anything to suggest that such decisions were not covered by previous legislation, as we do not believe that to be the case. Therefore, the clarification of inserting the word "including" implies that the provision has always existed, whereas if the words "in particular" are used, the clause is more likely to be interpreted as suggesting a new power.
	We are all concerned that we register the matter in the Bill. However, the Government feel that Amendment No. 160 does it better and that past decisions would be less subject to the—admittedly remote—possibility of challenge if the provision were included in our form rather than that proposed in Amendment No. 160A.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for his helpful reply. I am concerned that we get the matter right. The success of the first amendment of the noble Baroness, Lady Byford, on Report strengthens the Bill. In the light of that fact, in particular if the Minister is satisfied that the wording that the Government propose is satisfactory, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Baroness O'Cathain: moved Amendment No. 37:
	After Clause 30, insert the following new clause—
	"APPEALS AGAINST ENFORCEMENT ORDERS
	(1) Section 21 of the WIA (validity of enforcement orders) is amended as follows.
	(2) At the end of paragraph (a) of subsection (1), there is omitted the word "or".
	(3) After paragraph (b) of subsection (1), there is added—
	"(c) that the making or confirmation of the order was based on an error of law or fact; or
	(d) that in the circumstances of the case, the making or confirmation of the order was not reasonable."
	(4) For subsection (2) there is substituted—
	"(2) On any such application, the High Court may, if satisfied that any of the grounds set out in subsection (1) above are proved—
	(a) quash the order or any provision of the order; or
	(b) vary the whole of the order, or any part of the order whether the application relates to that part of the order or not.""

Baroness O'Cathain: My Lords, Amendment No. 37 relates to enforcement orders. Although there is a right of appeal against competition related decisions made by Ofwat, there is no right of appeal against other enforcement decisions made by Ofwat and the Secretary of State. I believe that that needs to be rectified.
	The amendment creates a right of appeal against enforcement decisions not related to competition that are made by Ofwat and the Secretary of State. That is part of a package of amendments on appeals. They aim to ensure that there are rights of appeal on the merits of the regulator's decisions to an independent person—possibly a member of the court of arbitrators—taking into account that there are already such rights in relation to the granting of abstraction licences and decisions on competition issues.
	The amendment and other provisions replace our previous "jumbo" appeals amendment that we dealt with in Grand Committee. It was somewhat complex and caused confusion. I hope that this amendment clarifies the situation. Instead, specific amendments are proposed to provisions where regulatory decisions affect existing rights or are punitive. I beg to move.

Lord Borrie: My Lords, I support the amendment. As the noble Baroness, Lady O'Cathain, said, it is a substitute, as was another amendment we debated previously. Another amendment is yet to come in relation to the "jumbo" clause, as she put it. This approach is a major improvement.
	Under Clause 30, significant powers are vested in the Environment Agency to deal with impounding or abstracting without a licence. Those powers are based on the subjective view of the agency. Clause 30 contains the words,
	"where it appears to the Agency"—
	—that there is a breach.
	There is a double subjectivity. Where it appears to the agency that a company has not complied with a condition, an enforcement notice may be served. The condition is that,
	"it appears that a breach . . . is causing or likely to cause significant damage".
	There is a double subjective basis on which the Environment Agency can serve enforcement notices.
	Non-compliance with an enforcement notice incurs potentially heavy sanctions. They are set out on page 35 of the Bill at proposed Section 25C: on summary conviction there is a fine of up to £20,000; on conviction there is an unlimited fine. One expects that a public authority such as the Environment Agency will act only from the highest motives. But let us suppose that the agency's exercise of a power is questionable. Can it be questioned at all? Under Section 21 of the Water Industry Act 1991, the only possible remedy that I can see for a company aggrieved by an enforcement notice is either unlawfulness or failure of the agency to comply with statutory procedures. However, as the power is expressed in very subjective terms, it is difficult, if not impossible, for any aggrieved company to cross the huge hurdle of demonstrating that the Environment Agency has acted unlawfully.
	The amendment would add two grounds: error of law or fact, and unreasonable use of power. The latter can be argued and might restrain any possible excessive use of power by the Environment Agency. We should expect the agency normally to comply with proper procedures and law, to act in the public interest and to behave in an upright way. But some official, sometime, might behave otherwise, and there should be a better remedy or appeal, as the noble Baroness suggested.

Baroness Byford: My name is attached to this amendment. I urge the Government to consider it, as it is very reasonable. My noble friend has gone to much trouble to ensure that it does what she wishes it to do. The noble Lord, Lord Borrie, rightly said that it gives us a chance to see where there is an error of law or fact, and whether the agency is using unreasonable power. I shall not add anything, as the amendment speaks for itself. I am very grateful to the noble Lord, Lord Borrie, for his support. He does not always agree with amendments; therefore, on this occasion I am doubly grateful to him for his support.

Baroness Miller of Chilthorne Domer: My Lords, I, too, can be brief, as the noble Lord, Lord Borrie, has said what needs to be expressed. We have tried to amend the Bill at other points to ensure that the agency is accountable in various ways. This amendment also seeks to ensure that.

Lord Whitty: My Lords, there has been a slight misapprehension by my noble friend Lord Borrie and those who spoke after him. The amendment, which would insert a new clause after Clause 30, has no impact on the Environment Agency. It deals with appeals against Ofwat—in the regulatory sense under the Water Industry Act—not the powers of the Environment Agency, which appear later in the Bill.
	The first part of the amendment is not necessary, and the second part is potentially dangerous. The first part adds nothing to the current provisions. The enforcement authority is already required to consult on the terms of its order. It is then required to give notice of its decision. An undertaker therefore has an opportunity to point out any error of law. If the regulator fails to take note of those representations, there are grounds for legal challenge. A company can question an enforcement order if it feels that it is unreasonable. Again, existing provisions give Ofwat a discretion not to issue an order if the breach is trivial or if the company has given an undertaking to Ofwat to remedy that breach. There are therefore already extensive, transparent safeguards to protect against arbitrary, unreasonable action by the regulator.
	It is probably the second part of the amendment to which I object more strongly. It would allow the High Court to vary an enforcement order if a complaint was upheld. That would include parts of the order which had not been the subject of the company's application. That would not be appropriate. The court already has powers to wholly or partly quash an order because it is unlawful; it does not need any additional powers for that. But it would be unusual to ask the court to substitute its own interpretation of what are often very technical issues involved in any alleged contravention, especially if those issues had not been the subject of the application in the first place. Therefore, it is giving too wide powers to the court. The powers that the court needs it already has. With that in mind, I hope that the amendment will not be pursued.

Baroness O'Cathain: My Lords, whereas I am very grateful to all who took part in the debate on this amendment, I am very disappointed by the Minister's response. The Minister deliberately said that in the first part of the amendment—I take it that he is referring to subsection (3)—the company, the undertaker, or whatever, has grounds for legal challenge. That would be a costly and difficult course for water companies. I think that the appeals mechanism would be better; that is, appealing to an independent person, possibly a member of the court of arbitration. I do not understand why the Government have taken this attitude.
	In addition, we are not being dealt with fairly as regards appeals which are not related to competition. Why should Ofwat, being the mouthpiece of the Secretary of State, not be allowed to appeal on issues not related to competition? With the support that I have received from around the House, in this instance I should like to test the opinion of the House.

On Question, Whether the said amendment (No. 37) shall be agreed to?
	Their Lordships divided: Contents, 123; Not-Contents, 120.

Resolved in the affirmative, and amendment agreed to accordingly.

Baroness Miller of Chilthorne Domer: moved Amendment No. 38:
	Before Schedule 1, insert the following new schedule—
	:TITLE3:"SCHEDULE A1 DEFINITIONS
	1 The following definitions shall be adopted for the purpose of this Act and shall supersede all previous definitions in the Environment Act 1995 (c. 25), the Water Resources Act 1991 (c. 57) and the Water Industry Act 1991 (c. 56)—
	"surface water" means inland waters, except groundwater; transitional waters and coastal waters, except in respect of chemical status for which it shall also include territorial waters;
	"groundwater" means all water which is below the surface of the ground in the saturation zone and in direct contact with the ground or subsoil;
	"inland water" means all standing or flowing water on the surface of the land, and all groundwater on the landward side of the baseline from which the breadth of territorial waters is measured;
	"river" means a body of inland water flowing for the most part on the surface of the land but which may flow underground for part of its course;
	"lake" means a body of standing inland surface water;
	"transitional waters" are bodies of surface water in the vicinity of river mouths which are partly saline in character as a result of their proximity to coastal waters but which are substantially influenced by freshwater flows;
	"coastal water" means surface water on the landward side of a line, every point of which is at a distance of one nautical mile on the seaward side from the nearest point of the baseline from which the breadth of territorial waters is measured, extending where appropriate up to the outer limit of transitional waters;
	"artificial water body" means a body of surface water created by human activity;
	"heavily modified water body" means a body of surface water which as a result of physical alterations by human activity is substantially changed in character, as designated by the member State in accordance with the provisions of Annex II of the Water Framework Directive;
	"body of surface water" means a discrete and significant element of surface water such as a lake, a reservoir, a stream, river or canal, part of a stream, river or canal, a transitional water or a stretch of coastal water;
	"aquifer" means a subsurface layer or layers of rock or other geological strata of sufficient porosity and permeability to allow either a significant flow of groundwater or the abstraction of significant quantities of groundwater;
	"body of groundwater" means a distinct volume of groundwater with an aquifer or aquifers;
	"river basin" means the area of land from which all surface run-off flows through a sequence of streams, rivers and, possibly, lakes into the sea at a single river mouth, estuary or delta;
	"sub-basin" means the area of land from which all surface run-off flows through a series of streams, rivers and, possibly, lakes to a particular point in a water course (normally a lake or a river confluence);
	"river basin district" means the area of land and sea, made up of one or more neighbouring river basins together with their associated groundwaters and coastal waters, which is identified under Article 3(1) of the Water Framework Directive as the main unit for management of river basins;
	"competent authority" means an authority or authorities identified under Article 3(2) or 3(3) of the Water Framework Directive;
	"surface water status" is the general expression of the status of a body of surface water, determined by the poorer of its ecological status and its chemical status;
	"good surface water status" means the status achieved by a surface water body when both its ecological status and its chemical status are at least 'good';
	"groundwater status" is the general expression of the status of a body of groundwater, determined by the poorer of its quantitative status and its chemical status;
	"good groundwater status" means the status achieved by a groundwater body when both its quantitative status and its chemical status are at least 'good';
	"ecological status" is an expression of the quality of the structure and functioning of aquatic ecosystems associated with surface waters, classified in accordance with Annex V of the Water Framework Directive;
	"good ecological status" is the status of a body of surface water, so classified in accordance with Annex V of the Water Framework Directive;
	"good ecological potential" is the status of a heavily modified or an artificial body of water, so classified in accordance with the relevant provisions of Annex V of the Water Framework Directive;
	"good surface water chemical status" means the chemical status required to meet the environmental objectives for surface waters established in Article 4(1)(a) of the Water Framework Directive, that is the chemical status achieved by a body of surface water in which concentrations of pollutants do not exceed the environmental quality standards established in Annex IX and under Article 16(7) of the Water Framework Directive, and under other relevant European Community legislation setting environmental quality standards at a Community level;
	"good groundwater chemical status" is the chemical status of a body of groundwater which meets all the conditions set out in table 2.3.2 of Annex V of the Water Framework Directive;
	"quantitative status" is an expression of the degree to which a body of groundwater is affected by direct and indirect abstractions;
	"available groundwater resource" means the long-term annual rate of overall recharge of the body of groundwater less the long-term annual rate of flow required to achieve the ecological quality objectives for associated surface waters specified under Article 4 of the Water Framework Directive, to avoid any significant diminution in the ecological status of such waters and to avoid any significant damage to associated terrestrial ecosystems;
	"good quantitative status" is the status defined in table 2.1.2 of Annex V of the Water Framework Directive;
	"hazardous substances" means substances or groups that are toxic, persistent and liable to bio-accumulate, and other substances or groups of substances which give rise to an equivalent level of concern;
	"priority substances" means substances or groups of substances identified in accordance with Article 16(2) and listed in Annex X of the Water Framework Directive. Among these substances there are 'priority hazardous substances' which means substances indentified in accordance with Article 16(3) and (6) of the Water Framework Directive for which measures have to be taken in accordance with Article 16(1) and (8) of the Water Framework Directive;
	"pollutant" means any substance liable to cause pollution, in particular those listed in Annex VIII of the Water Framework Directive;
	"direct discharge to groundwater" means discharge of pollutants into groundwater without percolation throughout the soil or subsoil;
	"pollution" means the direct or indirect introduction, as a result of human activity, of substances or heat into the air, water or land which may be harmful to human health or the quality of aquatic ecosystems or terrestrial ecosystems directly depending on aquatic ecosystems, which result in damage to material property, or which impair or interfere with amenities and other legitimate uses of the environment;
	"environmental objectives" means the objectives set out in Article 4 of the Water Framework Directive;
	"environmental quality standard" means the concentration of a particular pollutant or groups of pollutants in water, sediment or biota which should not be exceeded in order to protect human health and the environment;
	"combined approach" means the control of discharges and emissions into surface waters according to the approach set out in Article 10 of the Water Framework Directive;
	"water intended for human consumption" has the same meaning as under Directive 80/778/EEC of the European Parliament and of the Council, as amended by Directive 98/83/EC;
	"water services" means all services which provide, for households, public institutions or any economic activity—
	(a) abstraction, impoundment, storage, treatment and distribution of surface water or groundwater;
	(b) waste-water collection and treatment facilities which subsequently discharge into surface water.
	"water use" means water services together with any other activity identified under Article 5 of the Water Framework Directive. This concept applies for the purposes of Article 1 and of the economic analysis carried out according to Article 5 and Annex III, point (b) of the Water Framework Directive;
	"emission limit values", subject to paragraph 2 to 4, means the mass, expressed in terms of certain specified parameters, concentration or level of an emission (or both), which may not be exceeded during any one or more periods of time;
	"emission controls", subject to paragraph 5, are controls requiring a specific emission limitation, for instance an emission limit value, or otherwise specifying limits or conditions on the effects, nature of other characteristics of an emission or operating conditions which affect emissions.
	2 Emission limit values may also be laid down for certain groups, families or categories of substances, in particular those identified under Article 16 of the Water Framework Directive.
	3 The emission limit values for substances shall normally apply at the point where the emissions leave the installation, dilution being disregarded when determining them.
	4 With regard to indirect releases into water, the effect of a waste-water treatment plant may be taken into account when determining the emission limit values of the installations involved, provided that an equivalent level is guaranteed for protection of the environment as a whole and provided that this does not lead to higher levels of pollution in the environment.
	5 Use of the term "emission control" in this Act in respect of the provisions of any other European Parliament and Council Directive other than the Water Framework Directive shall not be held as reinterpreting those provisions in any respect."

Baroness Miller of Chilthorne Domer: My Lords, the amendment places in the Bill definitions that the Water Framework Directive, which must be enacted in international law by the end of the year, sets out as the definitions that should be used in discussing water issues.
	I believe that the Government feel that it is acceptable to have different definitions within the water world, but that will simply lead to confusion and difficulty. I have not been convinced of a good reason why we should continue without firm definitions that look to the future. I quote from New Civil Engineer magazine of 22nd May—not a magazine known for being at all political, but which is entirely practical:
	"It may seem as if there is plenty of time to implement the European Water Framework Directive (WFD), as every EU country has until 2015 to comply. But time is actually quite tight when the philosophy behind water supply and management is to be radically transformed".
	The first thing in a tight time-scale is that people need to know exactly what they are talking about. By adopting my amendment the definitions will make life much easier for all concerned and avoid confusion. I hope that the Government will be minded to be positive about setting down a clear guideline as to what means what and that they will not leave the agencies and the public in a state of confusion when dealing with water issues. I beg to move.

Lord Whitty: My Lords, this is a substantial amendment which aims to translate the terms of the Water Framework Directive into the Bill. We have had this discussion on several occasions during debates on the Bill, in which we have indicated that we intend to transpose the Water Framework Directive in due course following the consultations we are engaged in. For those purposes the definitions in the directive will be appropriate. But by incorporating those definitions in the Bill they alter the existing definitions in the Bill and earlier legislation in a way that can be confusing.
	For example, the definition of groundwater in the directive is different and narrower than that in the Water Resources Act 1991. Incorporating it into that Act would therefore limit the ability of the agency to control current and known pollution. In order to control pollution of a saturated zone—for example, as a result of indirect, diffuse discharges—it is necessary for controlled waters to include water in transit as it percolates from the surface through the unsaturated zone; that is, to include all groundwater in underground strata, whereas this definition does not. It is therefore important that for the purposes of the Water Industry Act 1991 the existing definition stands.
	Another example is "river", which we have also debated in passing. If we substitute the Water Framework Directive definition of "river", the current distinction between main and non-main rivers could be compromised. That would give rise to considerable confusion in domestic legislation; in particular, in relation to flood defence. The Water Resources Act defines "main river", and that Act generally sets out the permissive powers available to the Environment Agency to undertake work on such rivers. As noble Lords will know, all other watercourses are the responsibility of local authorities and internal drainage boards under the Land Drainage Act 1991, in which they are referred to as "non-main rivers".
	If we no longer had that distinction then we would need an alternative legal mechanism to show which watercourses were the responsibility of the agency, and which were for local authority internal drainage boards. The effect of transposing the directive prematurely into the Bill would be to introduce confusion in the previous definitions.
	Similar problems arise more directly in relation to water services. Throughout the Water Industry Act, the drafting and structure of the legislation is based on the distinction between sewerage services and the supply of water. The word "water" is used only in the context of the provision of fresh water. The framework directive definition of water services is different in that it covers both functions.
	In those three respects and, I believe, some others, it would obviously cause considerable confusion to introduce the water framework definitions into this Bill to apply retrospectively to earlier legislation. Of course, we will need to transpose the directive and, as we have explained, we intend to do so. Where the powers are not already in place, the directive powers will be transposed, reflecting the framework directive definitions. To do so in this Bill would confuse the issue.

Baroness Miller of Chilthorne Domer: My Lords, what time scale are the Government considering to transpose those parts that will need to be redefined, given that the framework is to take effect by the end of the year? Will the transposition start then? I can understand some of the technical reasons that the noble Lord has given me, but he has just illuminated my point that there will be a good deal of confusion between those who are working to the water framework directive definitions and those who are working to historic English definitions.

Lord Whitty: My Lords, as we have explained at earlier stages, we are involved already in the consultation on the transposition of the directive. It is intended that the directive will be transposed before the end of the year. Obviously, some parts of it will come into play later down the line, and the full effect does not come until 2015.
	The noble Baroness is right in the sense that there will be new definitions relating to new duties and responsibilities, which would not have existed before we transposed the directive. However, the old definitions will continue to apply in relation to the powers and duties that have existed through various stages of water legislation. To alter them in this context would distort the current understanding of those definitions shared by the water industry and everyone else.
	The noble Baroness will no doubt argue for the consolidation of everything into one big Bill. In this Bill, as with other legislation, the definitions involved relate to the powers in this Bill and not to some future piece of legislation, however we enact it. In the case of the Water Framework Directive, we will be enacting it in a very specific piece of transposition under the European Communities Act 1972.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for his reply. However, it is a great shame that the Government have not got their act together sufficiently to enable this sort of issue to be cleared up at this stage. I look forward to debating the consolidation issue, under the amendment to be moved by the noble Baroness, Lady Byford.
	I have listened carefully to the Minister. I propose to take further soundings from the water industry and environmental bodies. I may well return to the issue at Third Reading. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Byford: moved Amendment No. 39:
	Page 37, line 35, at beginning insert "regional"

Baroness Byford: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 40 and 41.
	Having studied the Hansard report covering this area of debate in Committee, I have concluded that the main reason for our concern is that the Bill limits the official committees of the Consumer Council to regional committees. Our amendment would free the logjam and allow flexibility where it is necessary, so that the council may operate more effectively. We feel that sound mechanisms are needed to control the licensed water suppliers. As it stands, the Bill seems to place all the burden on water undertakers and all the privileges with water suppliers.
	This is as good a point as any at which to seek further clarification of the Government's intentions. What really lies behind the creation of licensed water suppliers? In our debate on 10th April, the noble Baroness, Lady Farrington, stated:
	"At present, undertakers have a duty to supply customers outside their area for domestic purposes but not for non-domestic purposes. We have sought to simplify the situation and provide clarity by removing this distinction".
	She went on to explain that,
	"undertakers will compete only outside their areas through their associated companies and not directly".—[Official Report, 10/4/03; col. GC82.]
	Will the Minister confirm that associated companies may not be water undertakers? If so, why is that so? Why have the Government not opened the water market to competition between water undertakers? If licensed water suppliers can demand access to an undertaker's pipework, why should not another undertaker? What do the Government imagine a licensed water supplier will look like? With a potential market of some 2,000 customers throughout the country, will he have an office in a tower block with a telephone line? How will the supplier operate? Will he operate regionally?
	I should be grateful for further clarification on some further questions. Will it be possible for there to be 2,000 licensed water suppliers—each of the largest companies—which form a water supplier subsidiary to supply itself, for example? That is a possibility. Will it be allowable for such a subsidiary in a loss to claim tax relief?
	Those are very specific questions, so if the Minister needs a longer period in which to consider them, I am happy that he does so. However, we do need greater clarification. I beg to move.

Lord Whitty: My Lords, the noble Baroness raised some wider questions, but the amendments have two effects. First, they would allow the Consumer Council for Water to establish non-regional committees. We accept that it is necessary for the council to decide its own organisational structure and, in Schedule 2(15), that power can be used to consider licensee issues generally. There is no limit on how the council can use the power.
	The second aim of the amendment is to allow the council to allocate licensed water suppliers to any regional or non-regional committee. We discussed the matter in Committee, and I agreed to investigate the role of the council in relation to licensed water suppliers. We have tabled government Amendment No. 42, which makes it clear that the council will have the same powers for licensed water suppliers as it has for undertakers. The amendment aims to confirm that the customers of licensed water suppliers can also be looked after by regional committees. The second point is therefore taken care of by government Amendment No. 42, although some water suppliers will not necessarily be easily allocatable region by region.
	We shall discuss the issue of associated companies at a later stage. It is a little complicated. Perhaps I may reserve that until later unless the noble Baroness wishes to press me now.

Baroness Byford: My Lords, I am grateful for that response, and I shall be telling the noble Lord shortly that I am grateful for government Amendment No. 42. This can be a difficulty when one tables amendments between Committee and Report stages—clearly the Government have already responded to them in this case. I accept the Minister's comments on paragraph (b) of Amendment No. 41. I am happy for him to give me further detail between now and Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 40 and 41 not moved.]

Lord Whitty: moved Amendment No. 42:
	Page 38, line 10, leave out "(unless the context otherwise requires)"

Lord Whitty: My Lords, in moving Amendment No. 42, I wish to speak also to the amendments with which it is grouped.
	In Committee we said that we would consider extending the council's remit to monitoring licensed water suppliers, as I have just said. The government amendments in the group I am discussing take forward that commitment. We have come to the conclusion that there will be a need for the council to monitor licensed water suppliers and to look after the interests of their customers. These amendments will enable the council to investigate complaints concerning licensed water suppliers, obtain information on them and investigate the interests of their customers.
	Given that we all have the same objective, I hope that noble Lords will give a favourable wind to this group of amendments. I beg to move.

Baroness Byford: My Lords, I am grateful to the Minister. He was well aware of our disquiet at the way in which the associated companies were being dealt with. We are dealing now with a whole group of amendments. I therefore wish to speak to Amendments Nos. 75 and 77 which stand in my name. I am grateful to the noble Lord, Lord Whitty. He has kindly added his name to Amendment No. 77, for which I am grateful. Amendment No. 75 has been overtaken by other government amendments. I am grateful for that. Government Amendment No. 94 seeks to insert the words "in any other case". Will the noble Lord, Lord Whitty, explain the reason for that?

Baroness Miller of Chilthorne Domer: My Lords, we on these Benches also welcome the Government's move in the direction the Minister mentioned. Will he clarify whether my Amendment No. 88, which is included in the group we are discussing, is one that the Government are minded to accept? If not, will the Minister say why not? I, too, welcome the group of amendments.

Lord Whitty: My Lords, I should like to take away the amendment of the noble Baroness, Lady Miller, as it contains a definition which I do not think entirely relates to our definition of "relevant company". I shall come back to the noble Baroness on that matter.
	Government Amendment No. 94 seeks to insert the words "in any other case" in order to cover licensees and undertakers. It seeks to clarify that the measure extends to everyone who is covered by the remit of the council.

On Question, amendment agreed to.

Baroness Miller of Chilthorne Domer: moved Amendment No. 43:
	Page 38, line 15, at end insert—
	"(13) The Council shall exercise and perform its powers and duties so as to contribute to the achievement of sustainable development."

Baroness Miller of Chilthorne Domer: My Lords, this amendment seeks to ensure that the consumer council for water has a sustainability duty. We believe that it should have that duty. If it does not, we are concerned that it will not be able to justify spending time on sustainability issues. This is an important issue and one that rightly recognises the fact that the consumer interest extends far beyond just the price of water to issues such as the state of the water environment, rivers, wetlands and coastal waters. Indeed, surveys show that consumers rank concern about the environment high among their priorities. For those reasons I hope that the Government are now minded to accept the amendment. I beg to move.

Lord Dixon-Smith: My Lords, I wish to place on the record the fact that in principle we on these Benches support the amendment.

Baroness Farrington of Ribbleton: My Lords, I thank the noble Baroness and the noble Lord, Lord Dixon-Smith, for their comments. We should like to take the issue away and consider it between now and Third Reading.

Baroness Miller of Chilthorne Domer: My Lords, I thank the noble Baroness for that reply. I hope that means that the Government will consider the amendment favourably. In the light of that reply, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Chilthorne Domer: moved Amendment No. 44:
	Page 38, line 39, at end insert—
	"( ) Without prejudice to subsections (2) to (4) above, before—
	(a) making a modification to the conditions of an appointment pursuant to section 13 of this Act;
	(b) making a reference to the Competition Commission pursuant to section 14 of this Act;
	(c) giving any approval pursuant to section 143(6) of this Act;
	(d) making any decision which falls within paragraph (a), (b) or (e) of section 195A of this Act; or
	(e) making any proposal to a relevant undertaker limiting its charges for the supply of water, the provision of sewerage services or the reception, treatment or disposal of trade effluent,
	the Authority, the Secretary of State or the Assembly, as the case may be, shall consult the Council, and shall take into account any views expressed by the Council."

Baroness Miller of Chilthorne Domer: My Lords, this amendment seeks to ensure that the consumer voice is heard and that the consumer interest is balanced against other interests. It will be the purpose of the council to identify and represent consumers' concerns and it is therefore essential that decisions that affect consumers should be the subject of consultation with the council. At present consultation with the consumer body, Water Voice, is a matter of good practice. It is logical and appropriate that with the setting up of the council such good practice should be enshrined in legislation on the face of the Bill.
	I believe that in Grand Committee the Minister was still of a mind that such an amendment was not necessary because there would be a memorandum of understanding. I hope that the Government will have reconsidered the matter and are minded to include it on the face of the Bill as it would greatly strengthen the standing of the consumer council for water with consumers and its power. I beg to move.

Lord Dixon-Smith: My Lords, I wish to put on record the general support of these Benches for the amendment.

Baroness Farrington of Ribbleton: My Lords, I am sure that both the noble Baroness and the noble Lord will be pleased that we are prepared to take the matter away and reconsider it. We may prefer to look at a general requirement to consult where appropriate rather than specifying particular circumstances which may on reflection not keep up to date with regulatory developments. But I do not think that there is a drop of water between us and I am quite sure that we shall be able to resolve the matter at Third Reading.

Baroness Miller of Chilthorne Domer: My Lords, a general power sounds most promising. I look forward to seeing the Government's proposition. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Schedule 2 [The Consumer Council for Water]:

Lord Dixon-Smith: moved Amendment No. 45:
	Page 124, leave out lines 9 to 12 and insert "a representative of each of the four groups listed in section 27C."

Lord Dixon-Smith: My Lords, it would be nice if the Government's gramophone needle became stuck in the groove as regards this amendment but I suspect that it will not work quite like that.
	In moving Amendment No. 45 I should say that we understand the way in which modern society seeks to take into account people who suffer from any kind of disability or disadvantage whenever it is necessary to do so. However, we believe that the specific reference to the desirability of including a disabled person or someone who has experience of the needs of disabled persons among the membership of the council is not necessary. The Bill states:
	"The council shall consist of—
	(a) a chairman appointed by the Secretary of State;
	(b) one other member appointed by the Assembly; and
	(c) such other members as may be appointed by the Secretary of State".
	That seems to me to be such an open and inclusive method of appointing the membership that I do not see the need for further description. Therefore, the amendment seeks to delete lines 9 to 12 on page 124 and insert the words included in the amendment. I beg to move.

Lord Whitty: My Lords, we come back to the problem of lists here. I understand the intention behind the amendment but it is not necessary as it is implicit that for a member of the council to be effective he or she must have regard to the interests of all the groups listed in new Section 27C, to which the amendment refers. That is central to the mainstream functions of the council. Those of pensionable age or on low incomes or those in rural areas all share general concerns about the supply and quality of water. On the other hand, disabled groups have particular needs which are unique to them. That is why the disabled groups are listed in terms of membership, but other vulnerable groups or potential interest groups that might have a claim to representation on the council are not. The main point of the council is to have members who pay attention to the needs of all consumers, including the vulnerable groups referred to in Clause 27. That is why we need to provide special understandings of the interests of the disabled or chronically ill when we make appointments. There is a difference between them and other vulnerable people. Therefore, I hope that the noble Lord will not pursue his amendment.

Lord Dixon-Smith: My Lords, I cannot say that I am happy about the Minister's response. We have faced each other across these Dispatch Boxes from time to time on other Bills, and I am bound to say by observation that the Government argue the case whichever way they please, depending on the circumstances and the Bill. There is no consistent track record on the matter. That said, I do not know that the issue is fundamental. I am sorry that the Minister does not feel that he can act on the issue by exercising his power properly, without needing the added authority of a specific description, but I am not prepared to die for that cause. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 36 [Conditions relating to costs of water regulation]:

Baroness O'Cathain: moved Amendment No. 46:
	Page 39, line 27, at beginning insert "Subject to subsection (2A) below,"

Baroness O'Cathain: My Lords, the amendment is grouped with Amendments Nos. 47 to 49. I shall speak to Amendments Nos. 46 and 48 together.
	As we know, the Bill establishes a new consumer council for water and a mechanism by which companies must pay its expenses, but no limit is placed on the council's costs. The amendment tries to rectify that. Let us bear in mind that the costs of Ofwat are currently constrained by a condition in the company's licences. However, if the amendment were made, the payments that companies were required to pay to the council would be able to increase only in proportion to the increase in prices that they were able to charge.
	The amendments are simple. They would preclude the consumer council going mad—well, not going mad, but spending an enormous amount of money on research into areas where it was not necessarily essential, and putting all the costs on the water companies. There has to be some constraint. One cannot have a body such as a consumer council without constraints, particularly if the costs are borne by, in this case, the water companies. I beg to move.

Lord Dixon-Smith: My Lords, in supporting my noble friend on the amendments, I again refer to the debates on them in Grand Committee. The Minister was very clear that it would be explicit that water licensees would share the expenses. His response specifically was:
	"Schedule 4 . . . provides for a water supply licence to require payments to the Secretary of State of such amounts as may be determined, which could fairly include this".
	He went on to point out that:
	"In one sense, Clause 36 provides a transitional power to allow undertakers' existing conditions of employment to be modified".—[Official Report, 3/4/03; col. GC 197.]
	Our point is that it should be mandatory for the licensed water suppliers to pay their fair share of the costs of regulating the water industry.

Lord Whitty: My Lords, Amendments Nos. 46 and 48, which are in the name of the noble Baroness, Lady O'Cathain, are intended to tie the fees paid by each undertaker to each year's price limit in the periodic review. I understand that she wishes to be assured that regulatory bodies should not become a financial burden on the companies that they regulate, but the safeguards to prevent that are already in place. Undertakers' conditions of appointment already contain a cap on the level of fees payable, and Ofwat currently levies less than it is entitled to.
	As regards the consumer council, paragraph 10 of Schedule 2 gives the Secretary of State the power to decide how much money the council needs to run its operations. The Secretary of State therefore has the power to prevent the consumer council from going mad, as the noble Baroness said and then withdrew the remark. We therefore rely on—it is certainly in the interests of the Government to ensure it—the consumer council to be a cost-effective body and not one that runs away with the industry's money.

Baroness O'Cathain: My Lords, would that mean that the water companies could liaise with the Secretary of State and have discussions about the costs of the council? If they felt that the council's plans were going into the stratosphere and were far too expensive, and that the costs of running the council were far too expensive and bearing down on them, could they have an appeal to the Secretary of State?

Lord Whitty: My Lords, the noble Baroness mentions a formal appeal. I am not sure that that is provided in legislation. It certainly must be the case that the water companies would have the right to say to the Secretary of State, "Look, this consumer council is behaving extremely irresponsibly with money that it raises from us. Can you do something about it?", and the Secretary of State would have the power to do something about it. The problem with the amendment is that it limits the inflation of the costs to the fees in any given year, whereas the Secretary of State would take a view over a number of years and over the general strategy of the consumer council, rather than linking it to the regulated price.
	The amendment has the potential to have a perverse effect, as in one sense it would give Ofwat an incentive to allow a higher price rise if it felt that that was the only way to escalate its own costs. That is probably a remote possibility. Nevertheless, one has to bear it in mind if too mechanistic a relationship is made between the price rise and the cost of the council.
	Amendments Nos. 47 and 49 are designed to ensure that water licensees share the expenses of the consumer council. We would certainly expect them to do so. Schedule 4, to which the noble Lord referred, would allow a licence to require that such payments shall be made. He wishes to make that mandatory, which relates to that schedule rather than to Clause 36. The clause is a transitional power. Its purpose is to enable the regulator to change undertakers' conditions of appointment so that they would continue to pay for the consumer council, which will be set up in April 2005.
	We would not expect the regulator to grant licences to new suppliers until after April 2005 anyway, so the transitional power will not be needed for licensees. Instead, the power beyond that point in Schedule 4 would be the appropriate one. Although I would resist the amendments to that schedule, it is probably where any discussion of mandatory provisions rather than those on power for a licence to require should appropriately be discussed.

Baroness O'Cathain: My Lords, I cannot say that I am ecstatic about the Minister's response, but he does not expect me to be. Would it be feasible for him to have another look at the matter? There is some merit in making a cap related to the price increase.
	My experience of a lot of industries—not water companies, I hasten to add—is that if one gives a marketing body or department a free rein, the money goes so rapidly that one cannot understand where it has gone to. The consumer councils are a little like marketing bodies. They are full of people who want to do research and ensure that they get the best possible information. In some cases, they overdo it. I fear a situation in which the water companies will be placed under severe financial constraints if there is no cap related to the price. I beg leave to withdraw the amendment, but in doing so I ask the Minister to reconsider it.

Amendment, by leave, withdrawn.
	[Amendments Nos. 47 to 49 not moved.]
	Clause 38 [Objectives and duties under WIA]:

Baroness Byford: moved Amendment No. 50:
	Page 43, line 8, at end insert—
	"( ) any interests of consumers in relation to the possible effects of effective competition over an extended period of up to twelve years,"

Baroness Byford: My Lords, in moving this amendment, I shall speak also to my Amendment No. 51 and to Amendment No. 53. The Government have tabled two amendments on this matter, Amendments Nos. 52 and 55. I am grateful to the Minister for coming back with amendments which I believe have to some extent met some of our concerns.
	I shall speak to Amendment No. 50 first. In the run-up to the Bill, we received information and opinions from a variety of sources. It has been extremely difficult to determine what a licensed water supplier will be, how big, how competitive and how effective. Nevertheless, it seems fairly obvious that, by taking away the 2,000 largest customers from the water undertakers, there is a strong possibility that the latter will be less profitable. If that is so, there is also a possibility that it may be necessary for prices to the remaining customers to rise in order to protect water supplies. The regulator would have little room for manoeuvre and the 2,000 industrial and commercial customers would benefit at the expense of everyone else—a point about which I believe all noble Lords would be concerned.
	A further aspect concerns us. The figures for rainfall, county by county, used in an article in the Daily Telegraph gardening supplement at the end of May make it clear that sizeable areas of England are short of water. In several cases those areas are also under huge development pressure. As matters stand, new water supplies, whether piped or delivered by some other means, will be charged for across all users.
	If the largest customers are supplied even more cheaply than now, from another source than of now, they will not be available to pay a share of the new supply charges from the water undertakers. This must surely result in higher charges than would otherwise be the case for the rest.
	Amendment No. 51 was debated in Committee. The noble Baroness, Lady Farrington, replied for the Government and explained that if it were to be accepted the effect would be to remove the ban on licensed water suppliers operating in the same area as an associated water undertaker. Apparently, this would be anti-competitive in that the water undertaker might,
	"find ways of encouraging customers to transfer to its associates in order to remove them from their regulated activities and the price control mechanism".
	On reflection, we find this an astounding statement and one which needs to be explored more thoroughly. Water undertakers will, apparently, be allowed to form subsidiaries which may apply for and be granted a licence to supply water, but only in another water undertaker's area.
	Only the largest of 2,000 or so customers will qualify for transfer to a licensed water supplier. They are, however, apparently so naive that the effect of allowing an associated water supplier to operate in the same area as its parent water undertaker will be to encourage the undertaker to use means to persuade them to transfer. It would seem that the Government are acting more out of animus against the water undertakers than out of a true desire to open up the water industry to competition. At this point, the noble Baroness, Lady Farrington, said:
	"This could be done only at the expense of the customers remaining with the regulated business".—[Official Report, 8/4/03; col. 13.]
	From this short exchange it would appear that the introduction of licensed water suppliers will indeed be bad news for those customers, including domestic consumers, who will not be eligible to move from a water undertaker to a licensed water supplier. I am sure that this is not what is intended and I should be glad if the Minister would clarify the position and explain in different terms why a licensed water supplier may not operate in the same area as its parent or associated water undertaker.
	I turn to Amendment No. 53, which I moved in Grand Committee. Subsequently, the Government have kindly come up with Amendment No. 52 which, on reflection, I believe deals with the concerns expressed in our amendment. Therefore, I shall not set out in detail the reasons why we promoted Amendment No. 53.
	In moving Amendment No. 50, I have spoken to Amendment No. 51 and I commend our Amendment No. 53, which I believe we shall withdraw in the light of Amendment No. 52 tabled by the noble Lord, Lord Whitty. I beg to move.

Lord Livsey of Talgarth: My Lords, I am interested in the fact that the noble Baroness is to withdraw Amendment No. 53 in the light of the Government's introduction of Amendment No. 52. I think I understand the reasons for that. I mention in passing that one of the problems in the situations in which we find ourselves is that the water companies obviously have to produce sufficient profit to satisfy their shareholders. The possibility of opening up the markets further is one about which one might have reservations, given that water is such a scarce resource.
	We have a non-profit-making company in Wales, Glas Cymru, which could perhaps show the way in some respects in that it reduces the amount that consumers have to pay at present because it is funded in a different way. I shall refer to that in speaking to a later amendment. Therefore, I am pleased that it looks as though government Amendment No. 52 will go ahead and that best regulatory practice will be transparent, accountable and proportionate. This is a desirable objective and one that we support.

Lord Whitty: My Lords, in reference to Amendment No. 50 relating to a proposed period of 12 years, the Bill places a primary duty on the Secretary of State and the authority to further the consumer objective, which includes promoting effective competition where appropriate. In fulfilling that duty, the Secretary of State and the authority would need to consider the effects of competition on the interests of consumers, not just in the short term but in the medium and long term. Therefore, it seems to me that a 12-year period creates an unnecessary and artificial constraint on those decisions.
	In regard to Amendment No. 51, new Section 2(2C) also requires the Secretary of State, when furthering the consumer objective, to have regard to the interests of customers who are not eligible to be supplied by licensed water suppliers—thereby increasing the protection of undertakers' retained customers' interests against any possible unwanted and detrimental effects of competition.
	When noble Lords tabled a similar amendment to Amendment No. 51 in Grand Committee, I think that the main aim was to seek clarification on the restrictions under which associated licensed water suppliers can operate. The noble Baroness referred to that, as she did in relation to an earlier amendment today. The position is that undertakers can already carry out activities, apart from their regulated business, through associated companies. Under this legislation they cannot operate as licensed suppliers to themselves, and associated licensed water suppliers' activities must be at arm's length from those of their parent companies.
	Another sensible regulation is that licensees owned by undertakers can operate anywhere except in their own parent undertakers' areas. If the undertaker and the licensee operated in the same area, in theory that would allow the same company to compete for a customer and possibly effectively cut off all other competition for that customer. It would be an incentive for the undertaker to remove all its eligible customers from its regulated business into its licensed business—a point that I raised in Grand Committee—because the regulated business would be price- capped, whereas its licensee would not be price-capped in that way. When we discussed this matter, I believe that all consultees were in favour of that restriction in relation to the operation of associated companies.
	I turn to my Amendment No. 52, which, again, has been tabled in response to an amendment in Grand Committee. The amendment would have the effect of requiring the Secretary of State and the new regulatory authority to have regard to the principles of better regulation when carrying out their functions. There is a difference between my Amendment No. 52 and Amendment No. 53, which includes some other aspects of the Better Regulation Task Force.
	In order to clarify matters, I still have some concerns about spelling out the issue in the way that Amendment No. 53 would do—in particular, the implications of paragraph (b)—in that this industry is predominantly monopolistic. Therefore, regulation of the quality of supply or pricing is crucial, both in terms of all the sustainability objectives and public health. It is difficult to see that self-regulation in this industry would have the same appeal as it might in industries where wider competition exists. Incidentally, I would also argue that paragraph (e) of Amendment No. 53 is already covered by the Bill.
	Therefore, I believe that Amendment No. 52, which is worded in slightly more general terms, is the more appropriate. When we reach it, I shall wish to move that amendment in preference to the noble Baroness's amendment.

Baroness Byford: My Lords, I am grateful to the Minister for his response to these various amendments. We believe that the Government's Amendment No. 52 covers some of our anxieties and that is why I indicated that we would not press Amendment No. 53. In particular, there is always an argument as to whether self-regulation is or is not appropriate. Having heard what the Minister said, I am satisfied on that point.
	The Minister said that paragraph (e) in Amendment No. 53 is already covered. I shall need to ensure that we are fully satisfied on that point. However, at this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 51 not moved.]

Lord Whitty: moved Amendment No. 52:
	Page 43, line 40, at end insert—
	"(4) In exercising any of the powers or performing any of the duties mentioned in subsection (1) above in accordance with the preceding provisions of this section, the Secretary of State and the Authority shall have regard to the principles of best regulatory practice (including the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed).""
	On Question, amendment agreed to.
	[Amendment No. 53 not moved.]

Lord Whitty: moved Amendments Nos. 54 and 55:
	Page 43, line 48, leave out "(unless the context otherwise requires)"
	Page 44, line 9, leave out ", 66G" and insert "to 66H"
	On Question, amendments agreed to.
	Clause 39 [Guidance to Authority on social and environmental matters]:

Baroness Farrington of Ribbleton: moved Amendment No. 56:
	Page 44, line 35, at end insert—
	"( ) In formulating guidance, the Secretary of State and the Assembly shall, where practicable, have regard to the costs and benefits which may be expected to result from the guidance."

Baroness Farrington of Ribbleton: My Lords, in moving Amendment No. 56, I shall speak also to Amendment No. 58. The issue dealt with in this amendment was raised in Grand Committee when the noble Baroness tabled an amendment which had a similar intention to Amendments Nos. 56 and 58. The intention of both amendments is to set out in statute the requirement for an analysis of the costs and benefits that could be expected as a result of issuing guidance under this clause. We agreed to take away the idea and give it further consideration, as a result of which we have tabled Amendment No. 56.
	I believe that these two amendments are closer than they may seem to be on the surface. We would, of course, expect to publish our consideration of costs and benefits, as is standard practice with new regulatory proposals. The process of preparing a regulatory impact assessment also recognises that there will be cases when it may not be practicable to identify or evaluate fully all costs and benefits. That is expressly catered for in the government amendment. Therefore, I hope that the noble Baroness will feel that it is not necessary to press her amendment. I beg to move.

Baroness Byford: My Lords, I am grateful to the noble Baroness, Lady Farrington, for proposing Amendment No. 56, which comes in response to the long debate that we had in Grand Committee. I have prepared a speech, which I shall willingly repeat, on my Amendment No. 58 but, at this stage, I shall happily support the government amendment and thank the Minister for putting it before us on Report.

On Question, amendment agreed to.

Baroness Miller of Chilthorne Domer: moved Amendment No. 57:
	Page 44, line 35, at end insert—
	"(1A) In particular, before any alteration to the water pricing or consumer charging regimes, the Authority shall receive guidance to—
	(a) define a household income to water charge ratio below which consumers will be regarded as likely to have difficulty in paying such charges; and
	(b) set out such new measures to be undertaken by the Secretary of State or the Assembly as will address such difficulties."

Baroness Miller of Chilthorne Domer: My Lords, in this amendment I return to the issue of water affordability. I make no apologies to the House for taking a little time on this matter because I consider it to be very important. Indeed, I believe that it is perhaps the most important issue that we still have to discuss on Report.
	The first part of the amendment seeks to ensure that the Government address the issue of defining water affordability. The second part seeks to ensure that the Government do something to address the difficulties raised by the rising levels of debt. I believe this issue to be of equal interest to water companies, which are concerned about the high levels of debt, and to the groups which struggle to represent individuals with water bill debts and the individuals themselves.
	The fact is that levels of debt are rising. I remind the House that some 19 per cent of British households are now in debt in respect of their water bills. The Water Framework Directive will require changes to the way that water is charged for, and therefore it is possible that its implementation will increase levels of debt. I believe that the Government must do something to address this issue. Water UK estimates that annually at least £10 is added to every water bill for every household through people defaulting on their water bills. There is a clear need to separate the two groups. First, there is the "can't pay" group and, secondly, the "won't pay" group.
	I tabled a similar amendment in Grand Committee and I have taken the Minister's reply into account. At that stage he said that the amendment should relate more to the purpose that it sought to address. He said that the approach in the amendment that I tabled on that occasion was entirely in isolation. I hope that the new amendment relates to the activity of the regulator.
	This amendment further takes into account the Minister's comments in Grand Committee that the amendment would not have any effect beyond pure symbolism. The new amendment encourages the Secretary of State, when issuing guidance to the regulator on pricing, to be precise about what Clause 39 means. The regulator must have regard to individuals with low incomes, as specified in Clause 38(2C)(c). This amendment seeks to help further by ensuring that it is clear what a low income is with regard to water charges.
	Paragraph (b) of the amendment encourages the Secretary of State to think beyond the unsuccessful vulnerable groups regulations scheme. It is reasonable to praise those water companies that helped to advance work on that scheme in order to make it more successful. I refer in particular to the Severn Trent Trust Fund and the Anglia Water Trust Fund. The Government must come up with something that is more country-wide because at the moment the applications of the scheme are geographically arbitrary and inequitable. The take-up of the scheme is absolutely pitiful. According to government figures, it is 0.6 per cent and according to the Chartered Institute of Environmental Health, it is 0.4 per cent. Whichever of those figures is correct, vulnerable groups are not being dealt with in a meaningful way.
	I remind the Minister of the reasons why the tax and benefits system fails to tackle water affordability. There is a problem with water affordability that affects more consumers than are assisted by vulnerable groups regulations, no matter how they may be amended. The Government made clear their view that such customers are struggling with affordability and should be helped through the tax and benefits system. However, that is far from the solution of tackling the problem of the affordability of water, for various reasons. First, the notional element of income support that is intended to cover water bills has not kept pace with those bills. Between 1988 and 1997, the amount of that benefit fell from 80 per cent of the average water bill to just 55 per cent.
	Secondly, some groups of vulnerable consumers on means-tested benefits, particularly households without children, spend a far greater proportion of their income on their water bill than others. The average unmeasured household bill for 2001–02 amounts to 8 per cent of the income of the single person on jobseeker's allowance, 5 per cent for a couple on the jobseeker's allowance and 4 per cent for a pensioner on the minimum income guarantee. Those figures are similar for measured bills: 7 per cent, 4 per cent and 4 per cent respectively. Defra developed its own yardstick of 3 per cent, so it is aware that there is an issue. I am not clear why the Government will not therefore include the amendment in the Bill. Those consumers are paying unacceptable and unsustainable amounts for their water.
	As noble Lords said, the size of water bills varies hugely, depending on regions, but the amount of means-tested benefits does not. In Plymouth, for example, a single person on the jobseeker's allowance paid a massive 13 per cent of their income on the average water bill in 2000–01.
	It is time that the issue was addressed; I also refer to individuals who cannot afford their water and to water companies, which must struggle with the "won't pay" section of society, whom they are now unable to disconnect from the water supply. We heard at length in Committee that people who choose not to pay their water charges, even though they could, rank paying their water bill below paying for goods from catalogues, satellite dishes and so on. The Government must address the issue from everyone's point of view. I beg to move.

Lord Whitty: My Lords, as I said in earlier debates, the Government take this subject very seriously. We estimate that vulnerable groups constitute up to 1.5 per cent of eligible customers—currently, about 5,000. The recent consultation paper addressed issues of take-up. We are involved in that consultation.
	I do not believe that the amendment would deliver what the noble Baroness seeks. It would be possible to have a theoretical, mechanistic ratio between income and water charges, which could be supplied to the regulator and the companies. However, applying that ratio in particular circumstances would be extremely difficult, not least because income information is inevitably sensitive and is not normally in the public domain. Customers might be reluctant to declare their income to a private sector company. We are not currently happy to encourage a system that was based on that; in other words, on asking a company to check on its customers' income details.
	The Government have taken a number of steps to alleviate water poverty and we are consulting further. We already have the proposals about disconnection and the protection for vulnerable groups, which is in the Bill but was available earlier. The noble Baroness may be right to say that awareness of the situation needs to be improved, but I do not believe that the additional system that she would impose on the regulator and the company is deliverable in terms of the aim that she seeks to achieve. I therefore maintain that we can better deal with the matter when we have fully assessed the consultation on water poverty; the consultation period has just finished and we are now considering the responses. It would not be appropriate for us to adopt the noble Baroness's proposal in any case before we have considered those responses. It is not operationally possible to do that without involving vast sensitivities, which we do not wish to encourage.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for that reply. I am slightly surprised by it because my amendment simply asks that the authority should receive guidance to define a household income. It does not ask individual households what their income is. It therefore does not involve developing a mechanistic ratio, as he called it. It simply asks for a definition and leaves the Secretary of State to set out such measures.
	I understand that there is currently a consultation. The fact is that the responses will be received too late to be incorporated in the Bill, even if the Government were minded to do so. We might well be left to drift for several more years in this unacceptable position.
	I was saddened not to have the support of the noble Baroness, Lady O'Cathain, from the water industry's point of view. The industry also feels that something must be done to address the levels of debt, which it, too, finds difficult.

Baroness O'Cathain: My Lords, I thank the noble Baroness for giving way. I was tempted to speak earlier but we have gone over this piece twice already and measures are currently being considered. I was going to ask the Minister a question on another occasion but, while I am on my feet, I may as well ask him it now.

Baroness Byford: My Lords, I am afraid that my noble friend cannot.

Baroness O'Cathain: No, my Lords, I cannot. Isn't he lucky?

Baroness Byford: My Lords, my noble friend could write to the Minister.

Baroness O'Cathain: I will, my Lords.
	My issue on debt is different from that discussed by the noble Baroness. I wanted to keep them separate.

Baroness Miller of Chilthorne Domer: My Lords, I thank the noble Baroness for her explanation that she regards the matter as a different issue. I am disappointed by the Government's response. I remember that a number of the Minister's colleagues in another place, and indeed in this House, were a vociferous part of the national forum on water poverty. The measure that I have set out would move the matter forward, and I had hoped that the Government would have taken it on board. They clearly are not minded to do that, so I shall test the opinion of the House.

On Question, Whether the said amendment (No. 57) shall be agreed to?
	Their Lordships divided: Contents, 45; Not-Contents, 126.

Resolved in the negative, and amendment disagreed to accordingly.
	[Amendment No. 58 not moved.]

Lord Dixon-Smith: moved Amendment No. 59:
	After Clause 39, insert the following new clause—
	"COORDINATED REGULATION
	After section 5 of the WIA there is inserted—
	"PART 1A COORDINATED REGULATION
	COORDINATED REGULATION
	(1) In this section the Agency, the Authority, the Chief Inspector of Drinking Water and (if separately appointed) the Chief Inspector of Drinking Water for Wales and the Consumer Council for Water shall together be referred to as "the regulators".
	(2) The Secretary of State, the Assembly and the regulators shall exercise all their statutory powers and duties, which relate to or may affect the water industry, in a coordinated manner.
	(3) To that end, the Secretary of State, the Assembly and the regulators shall consult and cooperate with one another.""

Lord Dixon-Smith: My Lords, Amendment No. 59 deals with co-ordinated regulation. We debated the matter in Grand Committee on Amendment No. 102. The amendment was supported by the noble Baroness, Lady Miller of Chilthorne Domer, and the noble Lord, Lord Borrie. That amendment was criticised because it was exceedingly long, taking up one and a half columns of Hansard. Amendment No. 59 is the former Amendment No. 102 stripped down to its bare essentials.
	The Minister concluded his remarks in Grand Committee by inviting other Members to bring forward a more appropriate amendment. He said:
	"Perhaps I may leave it to other noble Lords to bring forward a more appropriate amendment".—[Official Report, 8/4/03; col. GC29.]
	That leaves us with the burden and we have done our best. I hope that it satisfied the Minister and that he is pleased with the result; otherwise we shall have to invite him to take it away to improve on it.
	It is a sensible amendment in principle and I ask the Minister to consider it seriously. I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, we support the idea of co-ordinated regulation. Although the Minister may point out some way in which the amendment can be improved, it seems to do the job.

Lord Borrie: My Lords, I gave a word of support for the amendment in Grand Committee. However, when I read it now, because of the very fact that it has been simplified, it looks like motherhood and apple pie. I say to myself, surely sensible regulators will get together and co-ordinate their activities. They will not live in separate ivory towers. Do we really need to have on the statute book that they should co-operate with one another? I now question the necessity of the amendment.

Baroness Byford: My Lords, the noble Lord, Lord Borrie, has more faith than we do and this is why we recommend the amendment. We hope that the Government will deal with it sympathetically.

Baroness O'Cathain: My Lords, I, too, recommend the amendment. In my experience people like to live in silos and do not communicate. The noble Lord, Lord Borrie, grimaced but that is the reality. People build up empires and say, "No one can come near me. I'm king of my castle so forget it". I support the amendment.

Lord Whitty: My Lords, we are all in favour of co-operation, co-ordination and communication between regulators. This amendment is better than the previous one, but it is not quite there yet. The problem is that, in one sense, it is so simple. That is not the motherhood and apple pie objection, but the amendment proposes that the regulators shall exercise all their statutory powers and so forth "in a co-ordinated manner".
	Each regulator has a separate and distinctive role and to co-ordinate on every exercise of power with the other regulators is not particularly appropriate. To provide for that in a general way in subsection (3) is clearly highly desirable, but subsection (2) might be over-prescriptive.
	However, I share the noble Lord's general objectives and I shall take the matter away and consider whether we can move some way down this road without unintended side effects.

Lord Dixon-Smith: My Lords, I am grateful to the Minister for that helpful reply. It removes from me the obligation to remind the noble Lord, Lord Borrie, of his remarks in Grand Committee. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness O'Cathain: moved Amendment No. 60:
	After Clause 39, insert the following new clause—
	"REGULATORY METHODOLOGY
	After section 2 of the WIA there is inserted—
	"2C REGULATORY METHODOLOGY
	(1) The Authority shall prepare and publish a statement of policy with respect to its determination of charges in periodic reviews and interim determinations under all or any of the instruments of appointment of companies as relevant undertakers made by virtue of Part II of this Act.
	(2) The Authority's statement of policy under this section shall include a statement of its policy with regard to the following matters—
	(a) the carrying out of its duties under this Act insofar as they relate to its determination of charges;
	(b) the matters to be taken into account and the methodologies to be applied in its determination of charges; and
	(c) the extent to which the performance of functions by persons with powers and duties conferred or imposed by or under this Act or any other enactment are relevant to its determination of charges.
	(3) The Authority shall determine charges in periodic reviews and interim determinations under a company's instrument of appointment as a relevant undertaker on the basis of the most recently published statement of policy.
	(4) The Authority may revise its statement of policy and where it does so shall publish the revised statement.
	(5) Publication under this section shall be in such manner as the Authority considers appropriate for the purpose of bringing the matters contained in the statement of policy to the attention of persons likely to be affected by them and shall not be made less than twelve months before a periodic review.
	(6) When preparing or revising its statement of policy under this section, the Authority shall consult relevant undertakers and such other persons as it considers appropriate, subject to the requirements of subsection (7) below.
	(7) For the purposes of subsection (6) above—
	(a) consultation shall be by way of written notice given by the Authority not less than six months prior to the publication of the statement of policy which it is preparing or revising;
	(b) such notice shall state—
	(i) the matters which the Authority proposes to publish in its statement of policy and its reasons for including them in the statement; and
	(ii) a period of not less than three months within which that person may give written notice of objection with respect to the matters referred to in the notice; and
	(c) the Authority shall give each person a reasonable opportunity to make oral representations to it on the matters referred to in the notice.
	(8) The Authority shall not issue or publish a statement of policy unless—
	(a) no notice of objection to the policy is given to the Authority within the time period specified in its notice under subsection (7); or
	(b) one or more relevant undertakers gives notice of an objection to the Authority within that time and—
	(i) the proportion (expressed as a percentage) of the relevant undertakers who have given notice of an objection is less than such percentage as may be prescribed; and
	(ii) the percentage given by subsection (9) is less than such percentage as may be prescribed.
	(9) The percentage given by this subsection is the proportion (expressed as a percentage) of the relevant undertakers who have given notice of objection, weighted according to their market share in such manner as may be prescribed.
	(10) If the conditions referred to in subsection (8) are not met, the Authority shall (within three months of its receipt of the first or only notice of objection) refer the policy to the Competition Commission for review.
	(11) Where a reference is made to the Competition Commission under this section, it shall be the duty of the Competition Commission to determine whether the policy which is the subject of the reference operates in a manner best calculated to fulfil the duties of the Authority arising under this Act.
	(12) Where a reference is made to the Competition Commission under this section, the Authority shall not prepare or revise its statement of policy other than on the basis of the determinations of the Competition Commission.
	(13) The Secretary of State may by regulations make such provision as he considers appropriate for regulating the procedure to be followed with respect to any reference to the Competition Commission under this section.
	(14) Without prejudice to the generality of the power conferred by subsection (13) above, regulations under that subsection may, in relation to any such reference, apply (with or without modifications) the provisions of any enactment relating to the references to the Competition Commission under the provisions of this Act, the Fair Trading Act 1973 (c. 41) or the Competition Act 1998 (c. 41).""

Baroness O'Cathain: My Lords, Amendment No. 60 requires the water regulator to consult on and publish on a timely basis a statement of policy on how the regulator plans to conduct a price review; and also to state the methodology that it will use to set prices.
	If a water company feels that there are some elements of methodology with which it is unhappy, the clause then allows the company to appeal to the Competition Commission for a strictly limited time period. The review which a company can seek must be of the whole of the methodology, to recognise that the methodology must be internally consistent. There cannot be cherry picking. All of this would take place well before a company submits a detailed business plan to the regulator, with detailed numbers to be used in price setting.
	The purpose of the amendment is to achieve better decision making by the water regulator. It seeks to ensure that the regulatory mythology—that was a Freudian slip!—methodology is well-based and agreed long before discussion of detailed plans and numbers takes place under the periodic review.
	At the moment, a company can appeal against a defective regulatory methodology only right at the end of the process, when it can appeal to the Competition Commission. This is far too late in the process.
	In the past, Ofwat has used defective methodologies that have been criticised by the Competition Commission. In the previous price review, the Competition Commission rejected an adjustment that Ofwat had made to depreciation allowances to align them with expected maintenance expenditure—the so-called "broad equivalence" rule. It also criticised a number of other detailed elements of the methodology. The Commons Environmental Audit Committee believed that the insufficient attention given to capital maintenance amounted to "intellectual neglect" on Ofwat's part. That appeared in the 7th report, Water Prices and the Environment.
	An appeal mechanism at the methodology stage could have picked this problem up and resolved it before further detailed numbers work. So the benefits of getting the methodologies right at an early stage would be substantial.
	In Grand Committee, the Minister said he thought that it was somewhat bureaucratic and would not improve the conduct of price reviews. Only one extra step is introduced into what is already a complicated process—that is, the referral to the Competition Commission on a strictly time-limited basis of the defective methodologies.
	The benefits of getting the methodologies right early on greatly exceed the costs of this process, and introducing this referral provides an important incentive to the regulator to get the methodologies right.
	The Minister also felt that it would greatly limit the flexibility of the regulator and his opportunities to innovate and would give companies the right to obstruct policies. Companies cannot obstruct policy. All they can do under the clause is to ask for a review. The amendment ensures that the regulator follows due process and consults properly, and enables peer review of methodologies by the Competition Commission. It builds on existing practices; it does not attempt to overturn them.
	The final objection raised by the Minister was that the balance of influence between the companies and the consumers is disturbed. This is simply nonsense. The regulator's new duty to pursue the consumer objective is not altered in any manner whatever. I beg to move.

Lord Livsey of Talgarth: My Lords, in general, we agree with the principle of the amendment. However, I should be grateful if in summing up the noble Baroness could explain subsection (9), which states:
	"The percentage given by this subsection is the proportion (expressed as a percentage) of the relevant undertakers who have given notice of objection, weighted according to their market share in such manner as may be prescribed".
	Does that place the larger companies at an unfair advantage? If so, why does the mover of the amendment wish to create inequality of this kind? Is not there a case for treating all companies in an equal way, or is there some agenda here that has put subsection (9) into this? I merely seek information and an explanation which perhaps the noble Baroness will address when she has had a look at it.

Lord Whitty: My Lords, I still cannot accept the amendment. Clearly, the company should have an early opportunity to make representations to the regulator, and Ofwat should—and does—provide constructive occasions for such dialogue on the methodology for the periodic review. However, this amendment says that the authority must issue a statement of policy at an early stage in the periodic review, that that could be challenged, and that the Competition Commission could be brought in at that stage to determine whether that policy should be pursued. That could slow down the process, but it could also give additional powers to the company to upset the intentions of the regulator before any final determination is reached, and therefore before the company would suffer any detriment—at which point they can call in the Competition Commission.
	The time restrictions implied by this measure would help make the process more static and inflexible, reducing the ability of the regulator to respond to changing circumstances. That is completely contrary to what the industy usually says about the regulator; namely, that it should operate much more flexibly.
	I know that the noble Baroness denies this, but the amendment would enable undertakers to drop or at least delay the statement of policy, and shift the balance of power and influence between companies and consumers, because consumers have no equivalent rights to make an outside appeal at this point in the process. It would also, as the noble Lord, Lord Livsey, says, shift power from the smaller companies to the larger companies, in that the effectiveness of any such appeal-blocking mechanism with reference to the commission would be dependent on the market share. That does not seem to be an equitable treatment, even within the company.
	This amendment therefore implies two shifts of power with which I am not prepared to go along. I regret that I continue to oppose the amendment.

Baroness O'Cathain: My Lords, I thank the noble Lord, Lord Livsey, and the Minister for his comments.
	The process of doing the periodic review is extraordinarily, excruciatingly long and detailed. It takes an enormous amount of management time. The idea of this amendment is to halve the process; to do the methodology and have it fixed in stone. In the past, the methodology has been found to be faulty, and the next stage, at which prices are set, is then faulty as a result.
	If the methodology is signed off, such a problem will not occur in future. The water companies want some certainty. They look back over their shoulders at what happened at the last periodic review. I thought that by putting a time-limited clause into the amendment it would help in that direction. They could not allow negotiations on the methodology to go on and on; there would have to be a cut-off point. We might review that to see whether the period specified is too much or too little.
	There is no hidden agenda as regards subsection (9), but I will certainly consider the point about the balance of power between larger and smaller companies. I was convinced of the validity of this one. I am a member of a very small water company, and I saw that in the interests of the company that I knew, the amendment would remove much uncertainty and cut down on the puzzlement of those who, after Ofwat's price findings were given, scratched their heads and wondered whether they could question the methodology and what result another might have yielded. It would put a stop to all that questioning if they knew once and for all that the methodology was correct and had been agreed.
	The amendment was in the interests of making the periodic review as efficient and effective as possible; to ensure that once the determination was given, there might be quibbles about price but there could be none about the methodology; to remove uncertainty; and above all, to recoup the management time that has been involved in all of this. It is difficult for people who are supposed to produce lots of clean, potable water and ensure consumer supply to spend so much management time on looking through the methodology ad nauseam. The amendment would have been a good counter to that.
	I am disappointed by what the Minister said. I will probably come back to it at Third Reading, but in the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness O'Cathain: moved Amendment No. 61:
	After Clause 39, insert the following new clause—
	"LICENCE MODIFICATIONS In section 14 of the WIA, after subsection (1) there is inserted—
	"(1A) Where a company has requested the Authority to modify the conditions of its appointment and the Authority has not consented to making the modifications, the Authority shall make to the Competition Commission a reference which is so framed as to require the Competition Commission to investigate and report on the questions in subsection (1).
	(1B) Before making a reference under subsection (1) or (1A), the Authority shall give notice of the matters specified in the reference to the company to whose conditions of appointment the modification relates and shall take into account any representations or objections which are duly made and not withdrawn.
	(1C) Notice under subsection (1B) shall be in writing and shall specify a period of not less than 28 days from the date of receipt of the notice within which representations or objections with respect to the matters proposed to be specified in the reference may be made.""

Baroness O'Cathain: My Lords, this is a new clause on licence modifications. Its purpose is to enable a water company to appeal to the Competition Commission against a refusal by Ofwat to modify the terms of its instrument of appointment, namely its licence. At the moment, only Ofwat has the right to initiate alterations to licences. The amendment lends a more even-handed approach to the issue. I beg to move.

Lord Whitty: My Lords, the amendment would create an automatic appeal to the Competition Commission against any refusal to amend conditions of appointment if requested to do so by the undertaker holding an appointment.
	The amendment would take no account of the issues in each case and would mean that relevant precedents would have to be ignored. It would not even allow the company concerned to withdraw its request, even if it agreed with the authority's decision. The amendment contains several rigidities and technical problems, in any case.
	The amendment would require the authority to consult and take into account the views of the company concerned on the terms of reference of the referral. It does not give the same rights to any other stakeholders or consumer groups.
	The amendment would also introduce a potentially bureaucratic appeal system which would unsettle the balance between the company and the regulator, and clearly disadvantage consumers. Therefore, I cannot accept the amendment.

Baroness Byford: My Lords, before the noble Lord sits down, could he explain to the House a little more about this amendment? Is he completely happy with the situation raised by my noble friend Lady O'Cathain as regards the Bill? Does he not feel that there should be a right of appeal?
	Does the Minister purely find fault with the words of this amendment, or is there a closed door; namely, that he feels that undertakers or water suppliers have no right to appeal directly themselves?

Lord Whitty: My Lords, the amendment relates to an appeal when an authority has refused a request from a company to modify its conditions of appointment. In those circumstances I would not look for any system of appeal. This particular system has additional problems in terms of its rigidity. Nevertheless I am not persuaded that we would need an appeals system in those circumstances.

Baroness O'Cathain: My Lords, I thank my noble friend for asking for clarification, which we now have. I also thank the Minister. He more or less suggested that the amendment is fatally flawed. I was interested in what he had to say. Not being a shorthand writer I was not able to take down what he said, so I shall read what he said in Hansard tomorrow. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 40 [Standards of performance in relation to water supply]:

Baroness O'Cathain: moved Amendment No. 62:
	Page 46, line 30, after "research" insert "and regulatory impact assessment"

Baroness O'Cathain: My Lords, in moving Amendment No. 62 I shall speak also to Amendments Nos. 63, 64, 65, 66 and 67. They all relate to standards of performance and to Clauses 40 and 41.
	The amendment places on the face of the Bill requirements to conduct a regulatory impact assessment in order to provide cost benefit analysis when standards of performance are set. Clauses 40 and 41 enable the Secretary of State to initiate regulations setting new or amended standards of performance in relation to water supply and sewerage services. The regulator can do so in order to pursue policy objectives relating to public health and the environment or otherwise, where the regulator considers such regulations to be in the public interest. The clauses also set out the process for making such regulations.
	At the moment the Secretary of State can make regulations setting standards of performance only if the regulator receives an application from the Director General of Water Services. That is in the Water Industry Act 1991, Sections 38, 39 and 95.
	Standards of performance are usually set by Ofwat. The main means are setting water quality programmes under the quinquennial periodic review process, the overall performance assessment and setting targets for water leakage. But the considerations that it must take into account are defined in statute. And the process, the financial (cost) calculations and timetable for the price reviews and its policies on security of supply, water quality and the environment that are available to the public are often subject to consultation. Otherwise standards of performance are set through European Union and UK legislation; for example, the EU Drinking Water Directive.
	Ministers want a reserve power to regulate the industry if they consider it politically necessary and/or if the water regulator is too slow to develop solutions to particular issues that arise. So companies need to be protected from the risk of responding to short-term political pressures without proper consideration of the costs to customers. One such safeguard is to have some kind of assessment in financial terms about whether benefits to the customer or the environment outweigh the costs. A balance needs to be struck. I beg to move.

Baroness Byford: My Lords, I want to add my weight to this set of amendments. So often legislation comes through and we do not always look at the regulatory impact. These amendments ask that this matter should be on the face of the Bill and that research and regulatory impact assessments be carried out automatically. I had hoped that the Government would welcome this. As this is not Committee stage, I cannot speak on this again, so I hope that the Minister will deal fully with the point.
	I have a couple of questions on the regulatory impact assessments as laid down in the amendments. If the Government say that the amendments are not necessary, could they identify where, within the Bill, the matter is dealt with in a satisfactory manner? If the Government are to say "No" to these amendments, we need to know whether they are saying "No" to the individual amendments or whether the Minister feels that the matters are already covered in the Bill. If so, perhaps he could say where they are dealt with in the Bill.

Lord Whitty: My Lords, I have some sympathy with the aims of the noble Baroness, but I do not believe that it is appropriate to write the RIA on the face of the Bill for wider consideration. As I have indicated, the Government are already committed to produce an RIA whenever these clauses are used to propose standards of performance. The Prime Minister made a Statement to that effect—nothing is more important than the Prime Minister's Satement. More relevantly, the commitment to RIA that accompanied the Bill stated that a separate RIA would be prepared on each occasion that the order-making power is used. Therefore, we have that in the process of the Bill. It is not in the Bill itself, but it is in the RIA produced with the Bill.
	I am opposed to prescribing the form of the RIA on the face of the Bill because it would limit the development of the RIA process, which has been evolving over the past few years. It has brought in other matters such as environmental appraisals, rural proofing, equal treatment and so on as well as the more traditional areas of cost and benefit. Therefore, to prescribe it would set it in concrete, whereas the RIA process is evolving all the time.
	Equally importantly, stating on the face of this Bill that an RIA is required every time an order-making power is used, would imply that where it is not so stipulated—despite the Prime Minister's Statement and other assurances by the Government—it may not be required. I am sure that this Government and any government of a party represented here would probably reassert that necessity. However, the fact is that in the courts, if it is stated in one place and not in another, that other place could say that it does not need an RIA to issue an order-making power under an Act, unlike under the Water Act which requires it to be done.
	For that reason of precedent, I am opposed to putting the RIA on the face of the Bill, although we are very committed to ensure that no orders in this context under it would be issued without such an assessment.

Baroness Byford: My Lords, before the noble Lord sits down, if such a matter had come through in the form of an order, which I presume he is inferring, would it be a negative or an affirmative order? That is of interest to us. Clearly, we have here the opportunity to debate the matter more fully. If it comes through as an order we have no power to stop it happening in the way in which the Government may wish it to be interpreted. I believe that clarification on that is important.

Lord Whitty: My Lords, a number of amendments in the group relate to different clauses. In some cases they are indeed negative procedures, but I am not sure that that is so in all cases. The objective of the amendment was to ensure that in all cases, in this context, the order-making powers, whatever the procedure within the House, should be accompanied by an impact assessment. I accept that principle, whatever the parliamentary process.

Baroness O'Cathain: My Lords, I thank my noble friend for her support and I thank the Minister for his conciliatory attitude for which I am grateful. He quotes the Prime Minister on the importance of an RIA. The Minister said that if you put it in one Bill you would have to put it in all Bills, as lawyers would have a field day if it was not in one Bill. People would say, "Why not when it is in the Water Act? Why not have an RIA on every Bill, if the Prime Minister is so for an RIA?" I take the Minister's point that it could limit the development of the RIA, because it is an evolutionary process, but practically every business process is an evolutionary process. It is not necessarily fixed in concrete. Perhaps we could do something with the amendment. I will take another look at it to see whether we could cover that valid point.
	One does not want to be fixed, but on the other hand, one wants to ensure that the impact assessment is made. I thank the Minister for his constructive comments. I will read them tomorrow, but I will probably come back at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 63 and 64 not moved.]
	Clause 41 [Standards of performance in relation to sewerage services]:
	[Amendments Nos. 65 to 67 not moved.]
	Clause 42 [General functions of the Council]:

Baroness Farrington of Ribbleton: moved Amendment No. 68:
	Page 49, line 8, leave out "and"

Baroness Farrington of Ribbleton: My Lords, Amendments Nos. 68, 69 and 70 extend the list of groups to which the council must have special regard. It adds customers of undertakers that are not eligible to switch suppliers under the Bill's competition measures. It matches a similar duty on the authority and is part of a package of government amendments that increase the council's influence on the development of competition. I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, I welcome this group of amendments and the fact that the Government have chosen to strengthen the role of the council in this regard at least. I look forward to seeing that enacted.

Lord Dixon-Smith: My Lords, like the noble Baroness, Lady Miller of Chilthorne Domer, we welcome the amendments. We think that the consumer council should be looking in this area, and it is helpful.

On Question, amendment agreed to.

Baroness Farrington of Ribbleton: moved Amendments Nos. 69 and 70:
	Page 49, line 9, at end insert "; and
	(e) customers, of companies holding an appointment under Chapter 1 of Part 2 of this Act, whose premises are not eligible to be supplied by a licensed water supplier," Page 49, line 11, at end insert—
	"( ) For the purposes of subsection (1) above, premises are not eligible to be supplied by a licensed water supplier if—
	(a) they are household premises (as defined in section 17C above); or
	(b) the total quantity of water estimated to be supplied to the premises annually for the purposes of subsection (2) of section 17D above is less than the quantity specified in that subsection."
	On Question, amendments agreed to.

Baroness Miller of Chilthorne Domer: moved Amendment No. 71:
	Page 49, line 29, leave out from beginning to end of line 6 on page 50 and insert—
	"( ) Subject to subsection (7) below, in the exercise of its function under this section, the Council shall have regard to the need for excluding from such proposals, advice, information and views, so far as practicable—
	(a) any matter which relates to the affairs of an individual, where the publication of that matter would or might, in the opinion of the Council, seriously and prejudicially affect the interests of that individual; and
	(b) any matter which relates specifically to the affairs of a particular body of persons, whether corporate or unincorporated, where publication of that matter would or might, in the opinion of the Council, seriously and prejudicially affect the interests of that body."

Baroness Miller of Chilthorne Domer: My Lords, this group of amendments expresses why my pleasure in the previous group of amendments is slightly alloyed. We must return to the fact that in this Bill the Government have created a consumer council for water but in some areas of activity they have already drawn the teeth of that consumer council before it has had a chance to bite.
	The Minister made a comment earlier this evening, when speaking to Amendment No. 53, about the monopolistic structure of the water industry, which is correct. The difficulty that the Government have had with the Bill is that they have modelled many of the clauses about the consumer council for water on the Utilities Act 2000. These amendments take us back to the unsatisfactory nature of those issues and the fact that we did not get much response in Committee, beyond the fact that the Utilities Act 2000 had been the model for them.
	Amendments Nos. 71 and 72 are concerned with the powers of the council to publish information about water companies. I will return to them in more detail in a moment. Amendment No. 76 leaves the council with a more definite remit to specify its needs for information. As much wrangling could happen over the word "reasonably"; that amendment seeks to delete "reasonably" from the Bill. I do not think that the council would wish to act unreasonably, so I do not see any reason to have "reasonably" in the Bill.
	Amendments Nos. 78 and 79 concern provision of information to the council. Amendment No. 80 deletes the part of the Bill that creates what I call the "round the houses effect", where if a person fails to supply information to the council, that failure is referred to the authority, and the Secretary of State can make regulations about that failure and so on. This deletion enables the council to have a more direct approach.
	Amendments Nos. 100, 101 and 102 give the council a duty to have regard for issues of individual or commercial confidentiality. The reason for including those in the Bill is that if the council is going to have a power to collect information, it must have regard to the fact that it is not going to abuse that power. In accepting the fact that it should have wider powers to collect information, it is sensible to table these amendments, which confine that power so that it cannot do anything that would damage either individuals or companies in a commercial manner.
	I will return in more detail to Amendments Nos. 71 and 72. We accept that water companies are monopoly suppliers and consumer protection relies on close scrutiny by the regulator and the consumer body. An independent consumer body will be able to publicise information about a company where the council has evidence that the company is causing consumer detriment.
	However, as currently drafted, the Bill can prohibit publication by the council of a water company's incompetence. That restriction is inconsistent with the Freedom of Information Act 2000. It is modelled much more on the Utilities Act, which supposes a structure that is not monopolistic. The Freedom of Information Act gives the presumption that a body can publish rather than cannot publish. As far as the consumer council for water goes, the whole Bill has been drafted in the negative with regard to publication issues. It cannot publish anything unless certain conditions are met. This group of amendments seeks to turn that around to a positive, so that it can publish everything, unless there is a good reason not to. I beg to move.

Lord Dixon-Smith: My Lords, the publication of information that anyone has the right to collect is always a problem area. I sympathise with the noble Baroness, Lady Miller of Chilthorne Domer, in putting down these amendments. She enunciated the correct principle towards the end of her remarks when she said that, in principle, everything that can be published should be published.
	That still leaves one with a problem as to where the boundary line lies. If the boundary lies in one place, particularly where it might concern individuals, it might well lie in a different place, or be considered to lie in a different place, if one was dealing with a registered water supplier or a major water company. There is a difficulty of definition, but the principle of publishing as much as can be published is one that we support.

Baroness Farrington of Ribbleton: My Lords, Amendments Nos. 71, 72, 79, 100, 101 and 102 are concerned with the consumer council's powers to publish information. The council is required to have regard to any opinion expressed by the authority about any serious and prejudicial effect of publishing or about the desirability of publishing. The amendments raise two issues: the level of protection of the individual or body and the extent to which the council can act on its own. We recognise the need for the council to be independent from the authority, but in this case it makes sense for the council to have regard for the authority's opinion. It is important to note that it will still be for the council to take the final decision.
	Assessing whether publishing information may have serious or prejudicial effects on a company may mean examining quite technical issues involving the financial markets, for example. Therefore, it would be better for the council to have to draw on the greater expertise of the regulator in those matters and then to have regard to the opinion.
	The legislation should also keep a balance between human rights of individuals and bodies and the public's right to information. We believe that the Bill as drafted strikes that right balance between those two concerns, whereas the effect of the amendments could be that an individual has no knowledge of the possibility of being named in a publication before it is printed.
	We support the aim of Amendment No. 76 to require the council to act responsibly and to avoid imposing an unnecessary burden. However, we do not believe that the amendment would add anything. It can require only information that it needs for the purpose of exercising its functions. Any such request would be reasonable.
	Amendments Nos. 78 and 80 would replace the dispute resolution procedures in the Bill and enable the consumer council to enforce its own directions when the authority or company refused to supply it with information. If an undertaker or the authority refuses to provide information to the council, it will need to provide reasons for its failure. The council will be able to assess those and publish them. Any refusal would therefore have to be backed up by very good reasons.
	If there is a dispute, it will be for the authority, or such other person as the Secretary of State prescribes, to decide whether the information should be provided. Reasons for refusal to comply may be technical; for example, commercial confidentiality. The authority, with its detailed knowledge of the water industry, is better placed than the Secretary of State or a third party to judge whether those claims are justified.
	We do not believe that it is appropriate to give the council enforcement powers, as it is a representative body for consumers, not a regulator. We should bear in mind the detailed procedures and safeguards that the regulator must observe if it takes enforcement action. That is not provided in these amendments. The consumer council should not be able to act without at least the same level of protection for the bodies that it proposes to act against.
	Incompetence is very likely to lead to complaints. There is no restriction on publishing information about complaints. I refer to Clause 45. I shall read carefully the point made by both noble Lords—about everything being published that can be—without any commitment. In the mean time, having given quite a full answer, I hope that the noble Baroness will feel able to withdraw her amendment.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for the detail of her reply, but I am not sure yet whether I should thank her for the spirit behind it. She says that she will consider carefully the need to enable the publication of more information; in other words, the premise is a support for publication rather than against it. Perhaps in discussions before Third Reading we can have a clearer idea as to whether the Bill could be improved in that regard.
	The Minister tempted me earlier in her reply to test the opinion of the House on whether the consumer council should, in some ways, remain subservient to the water authority. The consumer council could draw on enough expert opinion to give it the authority and expertise that it needs. I shall study the Minister's reply in detail. In the meantime, I look forward to more discussions and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 72 not moved.]
	Clause 43 [Provision of information to the Council]:

Lord Whitty: moved Amendments Nos. 73 and 74:
	Page 51, line 40, leave out "or"
	Page 51, line 42, at end insert "; or
	(c) a licensed water supplier,"
	On Question, amendments agreed to.
	[Amendments No. 75 to 80 not moved.]

Lord Whitty: moved Amendments Nos. 81 and 82:
	Page 53, line 35, after "company" insert "holding an appointment or a licensed water supplier"
	Page 54, line 6, after "company" insert "holding an appointment and a licensed water supplier"
	On Question, amendments agreed to.
	Clause 44 [Provision of statistical information to consumers etc]:

Lord Whitty: moved Amendment No. 83:
	Page 54, leave out lines 19 to 21.

Lord Whitty: My Lords, in moving Amendment No. 83, I shall speak to the remaining amendments in the group. They follow up the commitment I made in Committee to reconsider the duty placed on the consumer council to publish statistical information about undertakers' levels of performance. I reconsidered the matter, and the outcome is as noble Lords wished and is supported by Ofwat and WaterVoice. Amendments Nos. 83, 86 and 87 remove the duty from the council and leave it with the regulatory authority, where it currently resides. The other two amendments are consequential.
	Amendments Nos. 84 and 85 place on the consumer council a duty to publish information about complaints against licensed water suppliers as well as undertakers. There is a general consensus that we should move in that direction. I beg to move.

Baroness Byford: My Lords, I am grateful to the Minister for tabling this set of amendments. In Committee we had a long debate about treating water suppliers fairly. The Government were taxed by our suggestions then. We support the amendments.

On Question, amendment agreed to.

Lord Whitty: moved Amendments Nos. 84 to 87:
	Page 54, line 23, after "undertakers" insert "or licensed water suppliers"
	Page 54, line 26, after "undertakers" insert "or licensed water suppliers"
	Page 54, leave out lines 34 to 36.
	Page 54, line 44, leave out subsection (3).
	On Question, amendments agreed to.
	Clause 45 [Consumer complaints]:
	[Amendment No. 88 not moved.]

Lord Whitty: moved Amendments Nos. 89 and 90:
	Page 55, line 6, after "undertaker" insert "or a licensed water supplier"
	Page 55, line 7, at end insert "or the services provided by that licensed water supplier"
	On Question, amendments agreed to.

Baroness Miller of Chilthorne Domer: moved Amendment No. 91:
	Page 55, line 13, after "subsection" insert "(2A) or"

Baroness Miller of Chilthorne Domer: My Lords, the consumer council for water has a duty to investigate consumer complaints but has no power to resolve complaints. The amendment proposes that that power lies rightfully with the council.
	When we debated the matter in Grand Committee, the Minister said that, although the consumer council for water should have the duties of a representative, they should not be confused with those of an adjudicator or enforcer. He pointed to the "binding mediation agreements" between some WaterVoice regional committees and water companies whereby voluntary compensation can be made payable. He also noted that Energywatch—the equivalent of the consumer council, but for gas and electricity—did not have statutory powers to seek compensation for complainants, and did not seek them.
	As I mentioned previously, the comparison with the energy sector is misleading and irrelevant. Dissatisfied customers in gas and electricity can always switch suppliers, but in the water sector all household customers and most business customers will continue to be served by monopoly water companies.
	The amendment addresses the possibility that the consumer council for water, as the customers' representative, might be the right body to have a compensation power. Will the Minister explain in much clearer terms why the Government are giving the council a duty to deal with customers' complaints but no means of resolving them? Perhaps there should be another body, possibly the authority, which would have the power to fine companies and also the power to require compensation to be paid to customers following an investigation of their complaint. This is still one of the most unsatisfactory areas of the Bill in terms of consumers' rights; it will not make them feel very confident in the new consumer council. I beg to move.

Lord Borrie: My Lords, I oppose this amendment. As the noble Baroness knows, I did so in Grand Committee. I do not rely on the point with which she is quarrelling, as it were, with the Minister. Of course, I accept her point that there is a great difference in the water world compared to the energy world where, as she rightly said, if a customer is dissatisfied he can switch supplier. In the water world, ordinary consumers cannot switch suppliers although, to a limited degree, commercial consumers can.
	However, it is important to say that the water consumer council, or WaterVoice, should it continue to call itself that—I think it a very good name—has a great deal more to do in terms of representing the consumer, as it has done so well for many years nationally, locally and regionally. Its work is well recognised, particularly by the Government in this Bill. I am sure that the noble Baroness welcomes that it is given a degree of independence in the Bill that it did not have previously.
	The Bill establishes the consumer council for water, or WaterVoice, firmly as a representative of the consumer. One could use the word partisan. It is entitled to be partisan on behalf of the consumer. But to do the job of being partisan and representative would be very difficult if it involved also, from time to time, adjudicating upon a complaint made by a consumer against a water company and trying to judge impartially the arguments on both sides. It is very likely that lawyers would have to be involved; it is very likely that there would have to be a panel, or whatever, to do that particular job because the noble Baroness is suggesting that considerable penalties should be imposed. Water companies will not just go along with that without argument. I doubt that the noble Baroness expects them to do so. The jobs of adjudication and imposing penalties are very different from being representative. To try to do both would not be a good idea.

Lord Whitty: My Lords, my noble friend Lord Borrie has by and large made my arguments for me. The point is that we cannot confuse the role of advocate with the role of judge and jury. The council exists to represent the views of consumers in their widest sense. It cannot therefore adjudicate between consumers and undertakers or licensees. To do so would be to unbalance the situation. The alternative approach would be to give it some duty in relation to undertakers, but that is not its role. Its role is a representational role. In pursuit of that representational role it can make approaches to the water companies. Without formal powers, the present structure has led to a number of binding mediation agreements, but the consumer council is not actually doing the arbitration.
	The council can also revert complaints to Ofwat to enforce against a company using its existing powers. For the consumer council to have enforcement powers is not only unprecedented, it would also greatly confuse its role. Normally the Liberal Democrats are great advocates of separation of powers. In this context, the logic of the position of my noble friend Lord Borrie and mine would eventually persuade them that this is not a sensible course to pursue.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for his reply and for the contribution made by the noble Lord, Lord Borrie. I welcome the fact that the Bill gives the consumer council a degree of independence. I can see that the Bill, as drafted, does not give it the role of adjudicator although, of course, it could have chosen to do so. I know that I am barking up a tree on which the Government are not minded to give in. At this stage, I am content to look to the future and see how the consumer council for water works. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 92 not moved.]

Lord Whitty: moved Amendments Nos. 93 to 98:
	Page 55, line 27, after "Wales" insert "or to services provided by a licensed water supplier using the supply system of a water undertaker whose area is wholly or mainly in Wales"
	Page 55, line 28, leave out from "State," to end of line 29 and insert "in any other case."
	Page 55, line 41, at end insert "or the licensed water supplier"
	Page 55, line 42, after "undertaker" insert "or the licensed water supplier"
	Page 56, line 4, after "undertaker" insert "or the licensed water supplier"
	Page 56, line 11, after "undertaker" insert "or the licensed water supplier"
	On Question, amendments agreed to.
	Clause 46 [Investigations by the Council]:

Lord Whitty: moved Amendment No. 99:
	Page 56, line 36, leave out from first "consumers" to end of line 37.
	On Question, amendment agreed to.
	[Amendments Nos. 100 to 102 not moved.]

Lord Whitty: moved Amendment No. 102A:
	Page 60, line 28, at end insert—
	"( ) The power of the Secretary of State to make an order under subsection (11) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament."

Lord Whitty: My Lords, Amendment No. 102A in a sense is in response to Amendment No. 103. It relates to the power to make an order for determining a company's turnover, which is the means of limiting the penalty which may be imposed. We always intended that this power would be exercised through the negative resolution procedure. I am grateful to the noble Baroness for drawing it to our attention that the Bill, as drafted, does not achieve this. For technical reasons the provision needs to make reference to the order being a statutory instrument and the amendment that I have tabled does this. I shall respond to the noble Baroness's amendments where appropriate. I beg to move.

Baroness Byford: My Lords, I am grateful to the Minister for having listened to our arguments in Committee and for tabling the amendment. As I explained earlier, between Committee and Report it is necessary to table amendments, as the noble Lord knows so well. On this occasion, the amendment moved by the Minister is slightly longer than ours—usually it is the other way around. I am grateful to him for coming back with Amendment No. 102A and should like to record my thanks.
	I turn now to Amendments Nos. 104, 105 and 106. Amendment No. 104 proposes that we include slightly greater protection in that the imposition of a penalty was based on an error of law or fact and that the amount of penalty was unreasonable. Because this is Report and not Committee obviously I cannot come back again. If the Minister is unable to accept, I hope that he will give full reasons for the reluctance of the Government to accept these reasonable amendments.
	Amendments Nos. 105 and 106 return to an issue which I raised in Committee. I found the Minister's response to this amendment in Committee intriguing. He said:
	"The Bill is drafted so that the court will be able to set the level of interest".
	He continued:
	"The effect of the amendment would be that the court would be tied to the same decision whenever there was a successful appeal, regardless of the seriousness of the company's failure or of the merits of the case".—[Official Report, 8/4/03; col. GC 55.]
	It was my impression that the debate we had on penalties of up to 10 per cent of turnover hinged on the seriousness of the company's failure. The interest charge relates to the interest to be charged on a charged penalty—it gets a bit tongue-tying. It does not matter which party has to pay, the rate should be uniform. That is what we are trying to establish.
	From the Minister's explanation, we may infer that as the Bill stands the courts might award interest to water undertakers at rates below bank rate, but where fault is proven against them at rates well above bank rate. That action could be the result of rulings from other departments, notably the Home Office. We bring this issue back to your Lordships today, it is to be hoped, to take it a little further.

Lord Whitty: My Lords, in responding to the noble Baroness I shall continue speaking to the lead amendment, unless other noble Lords wish to speak.

Lord Livsey of Talgarth: My Lords, I want to respond to Amendments Nos. 105 and 106. I was intrigued by what the noble Baroness, Lady Byford, said about the Minister's response in Committee. I would like clarification as to whether there is a difference in penalties in relation to the severity of the offence. New Section 22E(6) on appeals states:
	"Where the court substitutes a penalty of a lesser amount it may require the payment of interest on the substituted penalty at such rate, and from such date, as it considers just and equitable".
	The Minister and the noble Baroness may prove me wrong, but it seems better for the court to decide rather than for there to be a fixed rate. I ask the Minister if there is no difference between the severity of the offence on the one hand—as the noble Baroness said, in quoting from Committee—or whether different levels of penalty will be applied in relation to the severity of different types of offence. I am not clear about that point, but if there is a substantial difference between the severity of the offences and penalties are applied accordingly, surely the court should decide. If what the noble Baroness said is correct, maybe she has a point.

Lord Whitty: My Lords, there seems to be a consensus in favour of my Amendment No. 102A. I want to comment on Amendments Nos. 104, 105 and 106. Amendment No. 104 is unnecessary. It deals with the reasons why a court can quash or reduce a financial penalty on grounds of either error of law or fact, or of unreasonableness. But both those criteria are built into the Bill.
	The enforcement authority has power under new Section 22A to impose a penalty only as is reasonable and it must act in accordance with the law. There is also notice before a penalty can be imposed, so there is an opportunity to point out an error of fact or law, or to contend unreasonableness given all the circumstances. The enforcement authority is required to consider such representations. If it fails to do so, then there is authority for it to be overturned.
	I turn to interest. We are dealing with a case where the court has substituted a different penalty to that imposed by the regulator. It may impose interest as it considers just and equitable, as currently drafted. The noble Baroness, Lady Byford, seeks to restrict that provision in relation to the bank rate. My view, which I believe is shared by the noble Lord, Lord Livsey, is that the issues must be left to the court, as they would be in other circumstances, to consider the reason for the modification of the penalty, the severity of the offence and the circumstances of the company and the complainant. Therefore it is important that we leave that discretion with the courts rather than attempt to set down a rigid formula in statute.

Baroness Byford: My Lords, our argument is not that the courts should be able to decide differently and impose different penalties. The argument is that they should not be deciding on different interest rates. I do not think the Minister has addressed that point, although it is clear in our amendment.

Lord Whitty: My Lords, I thought I was addressing it. We start with a situation where the court varies the penalty, and it is a question of whether there is interest for one or other of the parties involved. As with other cases where the courts have the ability to apply interest, discretion should be left to the court as to the appropriate level of interest taking into account everything in the case. I believe I am right that there is not normally a formula laid down and that the courts' discretion applies.

Baroness Byford: My Lords, I am greatly puzzled. I heard what the Minister had to say and at this stage I shall not pursue it further. But I need to read Hansard carefully. Perhaps between now and Third Reading we can have a conversation to clarify the matter.

On Question, amendment agreed to.
	[Amendments Nos. 103 to 106 not moved.]
	Clause 48 [Enforcement of certain provisions]:

Baroness Byford: moved Amendment No. 107:
	Page 63, line 10, leave out subsection (2).

Baroness Byford: My Lords, our argument for the amendment is based on our belief that it is not possible to be consistent, fair and right in assessing the likelihood of future transgression with no past wrongdoing to point the way.
	In Grand Committee the Minister made our point for us in his reply on 8th April. I quote from four sentences taken in sequence from an uninterrupted response:
	"so that the enforcement authorities . . . are able to take action before something goes wrong . . . the order itself is first and foremost to tell the recipient what action they must take to rectify a situation that has gone wrong.
	"If it is apparent that a contravention is about to happen . . . The reason for this change in the Bill is to reduce the time in which further harm can occur".—[Official Report, 8/4/03; col. GC 56.]
	If the clause causes that much confusion in the place of its birth, I imagine that it will become a lawyer's meal ticket for the courts. I beg to move.

Lord Whitty: My Lords, the noble Baroness is picking me up on my tenses and syntax. The point is that Clause 48 enables the enforcement authority to take precautionary action and reduces the timescale of its notice. The amendment would remove from the regulator the ability to take action before a contravention occurred. An enforcement order in that context would require a company to alter its operations to address a potential contravention. The enforcement authority would need to see clear evidence of circumstances where a contravention was likely to occur. The decision to impose an enforcement order in those circumstances would not be taken lightly, but it would be taken ahead of any damage being done to a third party.
	It would be the judgment of the regulator that the contravention would take place unless the undertaker altered its behaviour. One could think of several circumstances where that might happen. In all circumstances, we need to provide a precautionary power for the regulator to instruct a company to alter its operations in advance of a formal contravention having taken place. We should not have to wait for something to go wrong before the regulator acts. I hope that, after that explanation, the noble Baroness will not pursue the matter.

Baroness Byford: My Lords, the noble Baroness struggles to thank the Minister for his response, as she is not at all happy with it. The measure makes someone guilty before they have committed an offence, which is not desirable in law. It seems to prejudge them to have done something that they have not done—unless I have totally misread the clause and misunderstood the arguments we had in Committee. I am unhappy with the Minister's response. I shall certainly return to the issue at Third Reading, and I hope that between now and then we can come to a greater understanding on the matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 52 [Determination references under section 12 of the WIA]:

Baroness O'Cathain: moved Amendment No. 108:
	Page 66, line 39, at end insert—
	"(3C) For the purposes of subsection (3)(b)(ii) the principles there referred to shall permit, but not require, the Competition Commission, in re-determining any disputed price limit which a relevant undertaker had required the Director to refer to it, to include in that re-determination any allowance for all or part of that relevant undertaker's costs.
	(3D) In subsection (3C) above "relevant undertaker's costs" means—
	(a) the costs which it incurred in preparing for and pursuing its case before the Commission; and
	(b) any costs (whether of the Director or the Commission) which are to be recovered from that relevant undertaker under, or by virtue of, any condition of its appointment.""

Baroness O'Cathain: My Lords, the amendment deals with the issue of who pays for the costs of a re-determination of price limits by the Competition Commission where a company has appealed to the commission against the decision of the authority on its price limits. The amendment would give powers to the commission to allocate costs fairly between the company's customers, its shareholders and the customers of other regulated companies and taxpayers.
	Under existing law, when a company appeals to the Competition Commission and the commission re-determines price limits the costs of the appeal are included in the new price limits. The costs therefore fall on the customers of the company that appealed. In the two price limit inquiries held by the commission in 2000, for Mid Kent Water and Sutton and East Surrey Water, the commission followed the current law but questioned the desirability of invariably having to permit costs in such inquiries to be recovered from customers. In part that was because the costs appeared to be particularly onerous for the customers of the two relatively small companies involved.
	The amendment would therefore permit the commission to allocate costs fairly. We have tabled the amendment proposed by the noble Lord, Lord Borrie, in Committee. It is supported by Ofwat, Water Voice and Water UK. In Grand Committee, on 8th April, the Minister agreed to take away the two amendments proposed there on the matter and said that he hoped to return on Report with a government proposal. I tabled the amendment because no such proposal has yet appeared. I beg to move.

Lord Whitty: My Lords, the noble Baroness referred to my commitment in Committee to introduce an amendment to the same effect as hers on Report. It has proved difficult to draft that amendment, but with respect I cannot accept her drafting. However, it remains my intention to table an amendment at Third Reading.

Baroness Byford: My Lords, I fully support the amendment. The Government suggested that they would introduce an amendment, and this amendment was tabled to ensure that happened. The Minister has kindly indicated that the Government will do that, for which I thank him very much.

Baroness O'Cathain: My Lords, I echo what my noble friend said. I thank the Minister very much. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Schedule 4 [Licensing of water suppliers]:

Lord Dixon-Smith: moved Amendment No. 109:
	Page 131, line 5, at end insert—
	"In section 3(1)(d) after "undertaker" there shall be inserted "or licensed water supplier"."

Lord Dixon-Smith: My Lords, Amendments Nos. 109 to 113 relate to an exchange in Grand Committee at col. 72 on 10th April. The noble Baroness, Lady Farrington, assured my noble friend Lady Byford:
	"In supplying the water to licensed water suppliers, undertakers will remain under their existing duty under Section 3 of the Water Industry Act to further environmental objectives".—[Official Report, 10/4/03; col. GC 72.]
	In response to a query as to whether licensed water suppliers would be equally affected by that clause, the Minister's reply was, "Yes, I believe so". We felt that the matter should be definite and not a matter of belief. That is no disrespect to the Minister who may tell us that it is definite in which case we should be happy to withdraw the amendment. We felt obliged to table the amendments for the sake of certainty.
	Amendments Nos. 133 and 134 have been grouped with the first set of amendments, although they do not sit particularly easily with them. The Government stated that they did not want a removal of requirements on water undertakers to lay pipes to connect licensees to the system. All sorts of people have to lay pipes, cables, drains and heaven knows what else, with good will, gusto and great abandon and, of course, driven by absolute necessity. However, wherever it is practical to do so, those people should have particular regard to green belt land or property dedicated under a conservation notice as an area of outstanding natural beauty. I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, I am grateful to the noble Lord for introducing the first group of amendments for the sake of clarification, as the issue is important.
	Under Amendments Nos. 133 and 134, I agree that we need to know about land that is under a special conservation notice. Indeed, that may be more crucial than the general blanket green belt land designation. I should like to hear from the Minister on the subject of land under a conservation notice for environmental reasons.

Lord Whitty: My Lords, the noble Lord seeks clarification, but his amendments would instil a degree of confusion. Clearly, we want licensees' development activities to be subject to general environmental duties. However, they will already be subject to the same environmental controls as any other developer of land. Where undertakers exercise powers on licensees' behalf, they will be carrying out a function placed on them by the Bill and subject to the environmental requirements that apply when they carry out their other functions. Therefore, the amendment is unnecessary.
	Amendments Nos. 109 to 113 would require licensees to have regard to the desirability of protecting the environment, and so forth, when they formulate or consider proposals relating to undertakers' functions—but not, for some reason, their own. That would introduce a note of serious confusion, and the proposal is anyway unnecessary because that issue is covered under the general duties.
	Amendments Nos. 133 and 134 seek to introduce a condition before undertakers take steps to facilitate supplies by licensees not to damage or disturb green belt land or property designated under a conservation notice. However, control of development within the green belt is concerned only with the openness of the green belt, and Section 3 of the WIA already requires undertakers to have regard to protecting buildings and sites of special interest. The amendments would introduce a completely new restriction for licensed water suppliers that would not apply to any other company or person.
	The area is confusing. However, in short, when undertakers carry out functions, including exercising works powers in response to a request from a licensee, the general environmental duty under Section 3 will apply. If licensees carry out activities themselves, they will be subject to normal development controls and would need planning permission, together with any specific consents with respect to protected land or buildings, as well as needing to reach agreement with the landowners in the first place.
	I share the objective behind the amendments, which is to protect the environment without obstructing the path of licensees to the supply system. However, the amendments would confuse the situation, as almost all their intention is covered by other parts of the Bill or by general planning law.

Lord Dixon-Smith: My Lords, I am grateful to the Minister for his reply. I am not particularly surprised by it as I have had enough experience of general planning law to know what is involved. As regards the first four amendments in the group in particular, it is good to have the assurance that they are unnecessary and that the noble Baroness, Lady Farrington, was right in her presumption, even though at that stage it was a presumption and she could not define it as a fact. Although we shall need to study the Minister's reply with care I am grateful for it. It seems to me that it is a satisfactory explanation. Certainly it is satisfactory for now. With that I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 110 to 113 not moved.]

Viscount Simon: My Lords, in calling Amendment No. 114, I advise your Lordships that if it is agreed to I cannot call Amendment No. 115 due to pre-emption.

Lord Whitty: moved Amendment No. 114:
	Page 132, leave out lines 3 to 5.

Lord Whitty: My Lords, this rather lengthy series of amendments relates to the competition provisions of the Bill. These are largely technical and consequential amendments. However, there are four amendments to which I should like to draw your Lordships' attention.
	I agreed in Grand Committee to take away and consider the restriction on licensees' ability to reintroduce water supplied to a customer into the distribution system. Amendment No. 114 removes new Section 17A(6). The subsection prohibits the reintroduction of water by a licensee to an undertaker's supply system after that water had already been provided to a customer's premises by a licensee. After the discussion in Committee and further consideration, we now consider that the need to meet undertakers' water quality requirements for water input into their systems, in accordance with access agreements, and the likely cost of any necessary retreatment and of making a connection would make such a reintroduction very unlikely in practice; the subsection is therefore unnecessary.
	Amendment No. 148 ensures that the powers currently available to undertakers to carry out works to install, repair or replace meters continue to be available to them when a licensee rather than an undertaker uses a meter. Amendment No. 149 extends to meters used by licensees the offence of tampering with a meter so as to prevent it from showing an accurate reading. Amendment No. 151 provides for the exchange of information about pollution incidents between the Environment Agency and licensees in order to protect the public water supply system and the environment.
	The remaining amendments are technical. Unless noble Lords have particular concerns I shall not expound on those in detail. I beg to move.

On Question, amendment agreed to.

Lord Corbett of Castle Vale: moved Amendment No. 116:
	Page 133, line 45, leave out "50" and insert "25"

Lord Corbett of Castle Vale: My Lords, I was encouraged to raise the issue of the threshold requirement by WaterVoice, the body representing water customers, and Aqua Resources Ltd, which feels that, given the privatisation of the water industry, every consumer should have a choice of supplier.
	At least one of the industry regulators—I do not know which although the Minister does—believes that the threshold figure should be different from the 50 megalitres in the Bill; that is, either higher or lower. The Government argue—as the Minister did in a letter to me dated 22nd May 2003—that,
	"the threshold is a vital element in ensuring effective implementation of the competition regime".
	That is not the whole story because the effect of the present threshold is to limit competition and in turn distort the market because it shields a clutch of monopoly water suppliers from full competition. While they enjoy that protection they can use that monopoly position to offer, for example, gas and electricity services in markets more liberalised than the protected water market.
	There are other companies such as Countryside Energy, part of Countrywide Farmers plc, which offers a range of services including the supply of mains gas and electricity but is unable to do the same with water although it believes that extra competition would benefit its customers.
	The 50 megalitre threshold would provide choice to just 2,000 non-domestic customers compared with the 30,000 in the first phase of competition in the energy sector. Perhaps the Minister will be good enough to explain why that is so.
	If the threshold was set at 20 megalitres, about 5,500 customers would be eligible, rising to about 12,000 if set at 10 megalitres. Customers with water consumption of 20 megalitres pay bills of about £10,000 a year and those who use 10 megalitres about £5,000. As WaterVoice comments:
	"We believe bills of this amount are large enough to make the prospects of a better deal in terms of price and service in a competitive market attractive to these customers".
	It worries that new entrants will not be attracted and wants a 10 millilitre threshold.
	I understand the need for extra caution with water because of public health concerns but that does not dictate a particular threshold number. There is also the need to do nothing to impair the viability of service providers as competition is rolled out. So there are costs and benefits and, as the Minister has said, a balance to be struck—again I quote from his letter of 22nd May—
	"which allows the increase of competitive activity in a controlled manner to ensure that the regulatory regime is robust, and the effects of competition are consistent with a sustainable water industry".
	I anticipate that the Minister will not feel able to accept the amendment although perhaps when he replies he will make clear when the threshold level will be reviewed, and by whom, and whether he can say that it need not last for ever. I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, I have an amendment grouped with the one we are discussing to which I should like to speak. I want to hear the Minister say a little more about the threshold limits. They are set at a level which results in competition not being a reality for most consumers. There is a vast amount of water regulation relating to competition when that is not a reality.
	What happens when a 50 megalitre user becomes more efficient in his use of water and becomes a 10 megalitre user? Does the Bill provide for that? We have talked a lot about efficiency and we have heard some good examples of companies that have saved vast amounts of water but does that mean that they can no longer enjoy the possibility of choosing between suppliers? At the moment we are dubious that the current proposals will stimulate any energy savings or produce innovations. The proposals certainly allow new entrants to cherry pick the larger use customers that they will supply.
	Under the proposals in the Bill there is a perverse incentive for new entrants to select customers that are cheap to supply so, far from benefiting all customers, that may well have a negative effect on existing suppliers' finances and increase customers' bills. I should like to hear the Minister's comments on those issues. I have become more concerned about the matter as the Bill has progressed through its stages.

Baroness Byford: My Lords, I express my concerns and reservations about these two amendments. My reservations are not just my own but are shared by the National Consumer Council, which does not support the amendments. My fear is that the more the numbers are increased to go into competition, the greater the likelihood of the increase in domestic bills. If people keep being taken out of the existing system, obviously the cost to those left in the system will increase. I shall be interested to hear what the Minister has to say. The National Consumer Council believes that the initial 50 megalitre threshold for competition for large users is set at the right level and should not be lowered at this early stage. The legislation provides for the threshold to be varied by regulation in Schedule 4, under proposed new Section 17D(8), once the effects of competition are better understood.
	Although household customers enjoy some protection from the additional costs of the introduction of the competition regime, it is generally agreed that the bills of household customers will rise. The costs of the competition have yet to be quantified, but will include existing supplier revenue losses, the development of access codes, the increased regulatory pressures, IT systems, data management and the increased cost of capital. The consumer council firmly believes that the 50 megalitre threshold should be tested and the impact of the competition on household customers fully assessed before any moves are made to lower the threshold for water competition. We share its concerns.

Lord Whitty: My Lords, noble Lords who have spoken recognise that this is our initial move into competition, and it is a cautious one. It seeks to balance the aim of creating opportunities for competition with other, wider government objectives including public health, the effect on smaller domestic and commercial consumers, and protecting the wider environment. We consulted pretty widely on the threshold to be chosen. Although there were different views, the majority favoured a threshold of 50 megalitres or higher. That included the Environment Agency and the Drinking Water Inspectorate, with its concerns and responsibilities, as well as the National Consumer Council, to which the noble Baroness, Lady Byford, referred.
	Reducing the 50 megalitres to 25 or 10 megalitres would not fundamentally change the range of customers eligible, but it has a greater risk of impacting on the other objectives and other customers. Concern for any knock-on effect on the bills of smaller consumers must be greater where the threshold was moved down, particularly if it were moved down rapidly to the 10 megalitre level.
	Nevertheless, this is the start of a process, and we have plans in place to review the competition framework once it is in operation and its effects can be assessed. At Second Reading, I said that there would be a review of the whole competition framework within three years of its operation, to answer my noble friend on time scale. At that point, the Government will ask all three regulators—Ofwat, the water inspectorate and the Environment Agency—to report on the effectiveness of the regime. That will include reference to the threshold. The mechanism for changing the threshold is in the Bill, and the parliamentary process is the affirmative resolution.
	We certainly foresee the ability to reduce the threshold of such an order. However, we do not think it sensible. It is prudent to go in at the 50 megalitre mark and review the situation in three years' time. I hope that neither my noble friend nor the noble Baroness will pursue their amendments, in recognition that the Bill provides for change in future.

Lord Corbett of Castle Vale: My Lords, I thank the Minister for that comment, and other noble Lords who have taken part in the debate. I must say to the noble Baroness, Lady Byford, with the deepest respect, that I find her remarks quite amazing. I find it quite extraordinary for the party that put water privatisation on the statute book, the better to deliver competition and to give a better service to consumers, now to argue that it did not really mean that but meant limited competition instead.

Baroness Byford: My Lords, actually I did not say that at all. We are dealing with the Bill, which at the moment has taken out a lot of people from the original water supply system in the licences, so far as farming and agriculture are concerned. We are looking at the suggestion in the Bill that in the early stages there is a limit. That seems sensible; the noble Lord says that it is not. If we took matters to that extent, I should say that there should be no limit whatever, and I hope that he is not suggesting that.

Lord Corbett of Castle Vale: Well, my Lords, it is not my memory that, when the government whom the noble Baroness supported went ahead with water privatisation, any limit was put on competition. I understand the reasons that my noble friend gives for being cautious about the introduction of the competition. To claim to be on the side of the consumer when that never crossed the minds of anyone who privatised what I would argue—I do not want to start the argument tonight, but merely to mention it in passing—

Baroness Byford: My Lords—

Lord Corbett of Castle Vale: My Lords, I shall give way in a moment. Some of us regard water, as with other utilities, as a natural monopoly, but the point of saying, "No, we don't believe that", has been crossed and we have gone somewhere up that road. That is where the noble Baroness, Lady Miller, and I agree. The classic answer is, "You can't be a little bit pregnant".

Baroness Byford: My Lords, the noble Lord may be going down the line of a Commons debate in style. I do not agree with what he has said at all. As I said, we are dealing with the Bill as it stands at present. It would be foolish not to listen to what others have to say. One could say that one believed in something five minutes ago, and would never change one's view—never. That is a foolish thing to say as well. I hope that he would at least acknowledge that I have repeated what the National Consumer Council has said, so I think that his remarks are a little out of order.

Baroness Farrington of Ribbleton: My Lords, I remind noble Lords that we are on Report speaking to the amendment. With the greatest respect, it is not my job to judge between the red corner and the blue corner, particularly when people are waiting for the Unstarred Question.

Lord Corbett of Castle Vale: My Lords, I do not want to prolong matters. I simply make the point that the assertion is made by the National Consumer Council, and picked up by the noble Baroness, that complete competition would mean higher bills for consumers. The whole basis for water privatisation was that competition would lower prices. That is all that I am drawing attention to, but let us not delay on it. It is an assertion by the National Consumer Council that is not proven. I understand its concern about it, and of course about those in water poverty, but it is a big assertion for it to make.
	The point made by the noble Baroness, Lady Miller, about encouraging efficiency in the industry and then, in terms of how the Bill stands, perhaps getting rid of the trap of punishing people who are efficient and reduce water consumption—that is what we want—is one to which I hope the new body will pay some attention.
	I thank the Minister for making it clear that the threshold will be reviewed within three years. To that extent, it can be changed and we can introduce more competition over time. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 117 not moved.]

Baroness Farrington of Ribbleton: My Lords, I beg to move that further consideration on Report be now adjourned. In moving the Motion I suggest that the Report stage begin again not before 8.40 p.m.

Moved accordingly, and, on Question, Motion agreed to.

Burma

Baroness Cox: rose to ask Her Majesty's Government what their response is to recent developments in Burma (Myanmar).
	My Lords, I am most grateful to all noble Lords who are participating in this debate. The evidence of such widespread concern will be a great comfort to the people of Burma, suffering for so long at the hands of a brutal regime, many of whom feel forgotten by the international community. I should say that I was struck last night by a virulent virus. If I should have to leave the Chamber temporarily, I hope that your Lordships will understand.
	The military junta, with its Orwellian name, the State Peace and Development Council (SPDC) has recently incurred criticism for its re-arrest of the valiant Aung San Suu Kyi, leader of the peaceful democratic party, the National League for Democracy, which won over 80 per cent of the seats in the 1990 election. On 12th June, the United States Secretary of State, Colin Powell, took a virtually unprecedented step, writing a devastating critique in the Washington Post of the SPDC's attack on Aung San Suu Kyi. Entitled,
	"It's Time to Turn the Tables on Burma's Thugs",
	it outlines measures which should be taken against the SPDC, such as freezing its financial assets, banning remittances to Burma so that the regime cannot benefit from the foreign exchange, and placing restrictions on travel-related transactions that benefit the SPDC and its supporters. Will Her Majesty's Government be supporting similar measures against the SPDC?
	While the treatment of Aung San Suu Kyi is deplorable and worthy of the strongest possible reaction, her voice has still been heard, even during long years of house arrest; and there are many influential voices who speak on her behalf.
	But less often heard are the voices of the ethnic minorities—Karen, Karenni, Shan, Chin, Kachin, Mon, Arakan and others. Hundreds of thousands are suffering and dying from brutal policies, including military attacks on civilian villages, the destruction of homes and crops, forced labour in conditions so harsh that many perish, systematic rape, use as human minesweepers, forced relocations, denial of access to food or medical supplies and the displacement of over a million people.
	I have had the privilege of visiting some of these people inside Burma and those who have had to flee to camps in Thailand in order to survive. It is their voices which I wish to be heard tonight and their suffering I wish to highlight, because their predicament is desperate and many more will die if the SPDC is allowed to continue its brutal policies.
	Since 1996, the Burma army has destroyed at least 2,350 villages. There are over 110,000 refugees in Thailand, at least 1 million internally displaced people in eastern Burma, and perhaps 2 million in the whole country. Some are held in 176 SPDC-controlled relocation—or "concentration"—camps, but hundreds of thousands are hiding in the jungle, with little access to food, medicine or shelter and at great risk of attack from the SPDC.
	The SPDC also uses child soldiers. The recent Human Rights Watch report, My Gun Was As Tall As Me, concludes that Burma has more child soldiers than any other country in the world. Of about 350,000 troops, as many as 70,000—20 per cent—are children. The findings of Christian Solidarity Worldwide corroborate this report. I have spoken with some of these child soldiers, who escaped at great risk. Their stories are deeply disturbing. One former Burmese boy soldier said that out of 1,750 new soldiers in a training camp, 1,000 were children; another boy said that out of 250 new recruits, he saw 100 children; a third boy said that in his unit of 30 soldiers, 15 were children.
	Almost all the former child soldiers interviewed had been picked off the street, from bus stops or on their way home from school, by Burmese soldiers. Their parents do not know what has happened to them and the conditions in which they are kept are brutal. Beatings are common. One young boy, Nay, was beaten several times, once so badly that he could not walk for a week. Another young boy said that he had been beaten on one occasion by nine men because he had been late for a line-up. If they are lucky, they manage to escape, though at great risk. Nay said he escaped because, "I could not bear the torture any more".
	Then there is the policy of so-called "Burmanisation" or "cultural genocide". One Chin leader told us that the Chin language has been removed from the school curriculum. It is illegal to publish a Chin language Bible—although the Chin are 90 per cent Christian—and even Burmese language Bibles cannot be freely circulated in Chin state. A Chin leader said:
	"Religious persecution happens on a daily basis".
	In every major Chin town or village it was usual practice for the Chin to erect a Christian cross. But the SPDC has destroyed most of these crosses and replaced them with statues of Buddha. Fertile land farmed by the Chin has often been taken and given to Burmans from central Burma. "It is a systematic campaign by the SPDC", the Chin leader explained. "When people lose their culture and traditions, they lose what they are campaigning for".
	Reports have emerged from Karenni state that Burma army soldiers are offered incentives to marry Karenni Christian women. In Shan and Karen areas, according to Burma Issues, there is,
	"a military policy which stipulates an order by which Burmese soldiers are told to marry ethnic women—the obvious intention being that if killing and guns can't get rid of them then breeding them out will. Not only will it physically dilute the ethnic races into oblivion but it would also succeed in eradicating the culture and identity of the ethnic groups".
	The United States report on religious freedom in 2002 ranked Burma among the six worst countries. Christians among the Chin, Kachin, Karen and Karenni are particularly targeted, and churches are often destroyed or turned into Buddhist temples. Buddhists suffer too. The mainly Buddhist Shan, the Buddhists among the Karen and Karenni, and the majority Buddhist Burmans are oppressed and persecuted. The Muslim Rohingyas in Arakan state are suffering as much as those on Burma's eastern borders. According to Refugees International, Burma's citizenship law denies the Muslim Rohingyas citizenship. Confiscation of Rohingya land is commonplace, and the Rohingya are prohibited from leaving their villages to access markets, employment, education and medical care.
	May I therefore ask the Minister four questions? First, what measures have Her Majesty's Government taken, or do they intend to take, to increase pressure on the SPDC to end its persecution of the ethnic minorities and to enter into dialogue with them and with the National League for Democracy? The ethnic minorities and the NLD have repeatedly emphasised their desire for peaceful dialogue.
	Secondly, in some of our discussions with ethnic minority leaders, they have expressed an interest in holding such a dialogue in a third country, with the hosts acting as mediators. Thailand has been mentioned as a country which might be able to provide valuable assistance in this way. Might Her Majesty's Government consider encouraging such an initiative if it is felt to be appropriate by all parties involved?
	Thirdly, will Her Majesty's Government try to encourage the international community to speak with a more united voice? The European Union and the USA have introduced some economic sanctions and political pressure, but the effect of such pressure is limited so long as the members of the Association of South-East Asian Nations (ASEAN), along with China, Japan, Australia and India, continue their own policy of "constructive engagement" and "non-interference". Will Her Majesty's Government try to encourage those governments to use their influence to bring pressure to bear on the SPDC?
	Finally, what are the Government's priorities for international development with regard to Burma? Can the Minister confirm that Her Majesty's Government have recently provided 281,600 dollars for environmental projects in Burma, including 192,000 dollars for a bat conservation project in Karen state? If that is the case, what is the explanation for this policy when there are over a million IDPs bereft of food, medicines or shelter? Do the Government intend to provide any direct cross-border assistance to the over a million IDPs inside Burma?
	Burma is ruled by a regime which has wrecked the country's economy and rules by fear. Yet the people know that foreign investment will not help them. Mahn Sha, general secretary of the Karen National Union, emphasises that the SPDC uses the money from foreign investors,
	"to buy fighters, tanks, artillery, and with these weapons they kill, rape and destroy Karen people, they take people for forced labour and forced relocation, they oppress our people—and all the people of Burma—in many ways".
	Sanctions may create more economic hardship, but the ethnic minorities and the pro-democracy groups believe that they will suffer anyway—and that sanctions at least stand a chance of cutting off the regime's support and forcing it to the negotiating table.
	Peoples such as the Karen and Karenni valiantly supported the British in the past. Many speak with affection but are now expressing sad disillusion. "The British betrayed our trust", said an elderly Karen man who had served with the Allies in Burma in the Second World War. When asked why the Karen had been so loyal to the British, his response was simple: "Because we were foolish".
	I hope that the Minister's answers tonight will give hope to the Karen and others who served our country so loyally and so bravely at our time of need, so that we will not be seen to be betraying them in their hour of greatest need.

Lord Faulkner of Worcester: My Lords, I warmly congratulate the noble Baroness, Lady Cox, on initiating this debate and on the eloquent and moving speech she made. The noble Baroness has given us a flavour of the sort of country that Burma has become. Here is an extract from the newsletter of the Alternative ASEAN network on Burma, dated 11th June. It concerns what happened on 30th May:
	"Black Friday, May 30, and the ensuing crackdown has been the most ruthless and bloodiest attack on the democracy movement in Burma since the 1988 massacre. Five hundred to 1,000 USDA members, police, men dressed as monks, armed soldiers and prisoners ambushed hundreds of unarmed NLD supporters, Daw Aung San Suu Kyi and the NLD team with lethal weapons: guns, sharpened bamboo stakes, catapults, and iron and steel pipes. Hundreds have been arrested, killed and are missing. Reportedly 65 bodies were secretly cremated in the Northwest Military Command compound. Scores of people are missing".
	A similar and even more graphic account is given by Mr John Jackson, director of The Burma Campaign UK, who has written to a number of Members of this House. Your Lordships may remember that I asked a topical question about the arrest and detention of Aung San Suu Kyi in this House last Wednesday. I was pleased to receive a robust and helpful reply from my noble friend Lady Symons of Vernham Dean.
	However, one of the strongest points that Mr Jackson makes in the letter which I received from him yesterday is that the "brutal general"—his words—who rules Burma, Than Shwe, is not a man who worries about strong diplomatic language. However, he is a man who worries about economic sanctions. Mr Jackson says:
	"His regime earns most of its income from foreign investment and a few key exports, such as oil, gas and gems. Income from these sectors has helped the regime double the size of the army to half a million soldiers".
	So the ideal would be the introduction of world-wide economic sanctions imposed by the Security Council of the United Nations. If that cannot quickly be achieved, an investment ban should be imposed by the European Union. At the very least, the United Kingdom should implement such a ban.
	The involvement of British companies in propping up the Burmese regime is particularly deplorable. One of those is British American Tobacco whose deputy chairman, Kenneth Clarke, MP, in a private letter, described the junta as "an extremely unpleasant regime". This regime is a 40 per cent shareholder in BAT's Burma subsidiary, Rothmans of Pall Mall Myanmar. So far, BAT has shown no willingness to follow other British companies such as Premier Oil in selling its investment in Burma.
	Another company which appears to care nothing about human rights in the country where it is making money is Orient-Express, the luxury train and ship operator. The brochure which I read on its website this morning almost parodies itself. Here are some examples:
	"Few places on earth remain untouched in their natural beauty and charm from one century to the next. The ancient land of Burma, now known as Myanmar, is however an exception to the rule, and we bring you the best of this fascinating, unspoilt country. The people of Myanmar love to celebrate and throughout the year find endless reasons for frivolity and festivities.
	"Myanmar was once one of Asia's most inaccessible countries. Having turned its back on the world, Myanmar escaped the excesses of commercialisation. As a result, the country has retained an enviable way of life from which we can all learn".
	That way of life from which we can all learn presumably includes introducing forced labour for millions of men, women and children, the use of rape as a weapon of war against ethnic women and children, the death of one in 10 babies before their first birthday, becoming one of the largest illegal producers of illegal opium and heroin, denying an elected party its right to govern and imprisoning its internationally revered leader, and reducing one of the richest countries in Asia to one of the poorest in the world. There is quite a lot to learn from there, my Lords.
	I assume that before British people sign up for these very expensive holidays in Burma, they check with the Foreign and Commonwealth Office whether it is a good idea to go there. I regret that if they rely on the country advice on the FCO website they will not receive much help. The summary does mention Black Friday and it says that,
	"the situation is uncertain and tense".
	But the opening words are:
	"The majority of visits to Burma are trouble free".
	Nowhere on the website is there a reference to Aung San Suu Kyi's plea to westeners not to visit as tourists, to her recent arrest and detention, or to her role as the legitimate elected leader of the Burmese people. Indeed, she is not mentioned at all.
	The FCO website is less helpful and explicit than it was when this House debated Burma in October 2000. At that time it contained a link to the letter which the late Derek Fatchett wrote to the chairman of the Association of British Travel Agents drawing ABTA members' attention to the request of pro-democracy leaders for Britons to boycott Burma as a tourist destination. It would be a small but significant step if, when my noble friend replies, she could indicate that a suitable "Don't visit Burma on human rights grounds" message could be restored to the FCO's country advice website.

Lord Alton of Liverpool: My Lords, in endorsing every single word that the noble Lord, Lord Faulkner of Worcester, has just expressed, perhaps I may also associate myself with what the noble Baroness, Lady Cox, said in initiating tonight's timely debate. Her own personal example and her courage and bravery in raising this issue again and again in your Lordships' House is an inspiration to us all.
	The Burmese military's decision to re-arrest Aung San Suu Kyi has thrown back into sharp relief the policies of the Burmese military junta. It is every bit as brutal towards its own citizens as the regime that terrorised Iraq, and the world needs to be much clearer about how it will deal with the systematic atrocities and the depredations in Burma. I particularly welcome the very strong statement by the American Administration last week and the statements coming out of the American Congress, which I hope we shall take the opportunity tonight to endorse.
	To date, as the noble Baroness, Lady Cox, said, relatively little interest has been shown in the genocide perpetrated by the Burmese military and which western governments, as we heard as recently as Question Time in your Lordships' House again last Wednesday, have been very reluctant to name as such.
	In the spring, I travelled again to the Burma border under the auspices of the Jubilee campaign. I was accompanied by Congressman Joseph Pitts. We saw there some of the victims of the terrible atrocities that have been referred to this evening. They include relatives of those who have faced summary executions, rape, forced relocations, destruction of villages, destruction of food stores and crops, and the use of forced labour.
	More than 650,000 Karen, Karenni and Shan have been internally displaced. More than 200,000 refugees have fled to neighbouring Thailand. Many displaced people are hiding in the jungle with little or no food or medicine, and they are usually shot on sight by Burmese troops. I can think of no other country where so many displaced people are being subjected to a shoot-on-sight policy, yet Her Majesty's Government and the international community continue to pay relatively little attention to the desperate plight of the Karen, Karenni and Shan.
	Perhaps I may relate the story of one small child whom I met at a refugee camp near Mae Sot. It illustrates how the brutality and violence of this perfidious regime continues. Saw Naing Gae is just eight years old. He saw the Burmese military shoot dead his mother and his father. He was then trafficked across the border into Thailand and sold to a Thai family. Deeply traumatised, he managed to escape and made his way to the camp where he is staying with a group of 30 other orphans. Every trace of joy and innocence had been stamped out of him; and all that by the age of eight.
	Saw Naing Gae squatted alongside four other children when I met him. Those other children—brothers and sisters—had seen their parents brutally murdered as well. The oldest girl, aged 12, is now head of their family, and she dissolved into tears as she recounted their story.
	Unlike Saw Naing Gae, Naw Pi Lay did not survive. Aged 45, the mother of five children and pregnant with her sixth, she was murdered in June last year by the Burmese militia. During a massacre in the Dooplaya district of the Karen state, 12 other people were killed, including children aged 12, seven, five and two. That is not anecdote. It is carefully documented and I sent the documentation to Her Majesty's Government on my return in the spring.
	In Chiang Mai I met the authors of a meticulous 120-page report on the Burmese military regime's use of sexual violence in the Shan state over the past six years. The report of the Shan Human Rights Foundation and Shan Women's Action Network, Licence To Rape, details how rape has been used as a weapon of war. Sexual violence, especially widespread gang rape, has terrorised and humiliated communities, flaunting the power of the regime and "rewarding" troops and demoralising resistance forces. The truth is that the Burma junta has turned its country into one vast concentration camp.
	At Mae Sot, we took evidence from the Committee for Internally Displaced Karen People. It provided me with more than 100 pages of carefully documented examples of human rights violations committed by Burmese military over the past 12 months alone.
	Even if the British Government refuse to accept that genocide is taking place, as they have done in the past, it should be obvious to even the most casual observer that war crimes are being inflicted on the Karen, Karenni and Shan; that in itself should be enough to justify the setting up of an international criminal tribunal by the UN Security Council to try Burma's military regime.
	With the recent crackdown against the National League for Democracy and the detention of Aung San Suu Kyi, the Italian under-secretary of state for foreign affairs, Margherita Boniver, said that the European Union will be considering in detail the possibility of submitting the issue to the UN Security Council. Italy will take over the presidency of the European Union this month, so I hope that when the Minister replies, she will tell us that the Government will give their full support to the initiative.
	To conclude, the Government should ban all new investment by British companies, as the noble Lord, Lord Faulkner, argued. It should also call on the Security Council to set up an international criminal tribunal to try the Burmese regime for war crimes, crimes against humanity and genocide. I hope that the Minister will answer the question that I put last Wednesday at Question Time; if this is not genocide, what is?

Viscount Slim: My Lords, I must agree with what the noble Baroness and the two noble Lords have said. I want to consider one or two other aspects.
	There is no doubt that a military government who rule by tyranny, lies, spies and torture can never gain the confidence, pride or loyalty of the people. That is extremely stupid because the greatest resource in Burma is the people; they are a marvellous people. They have initiative when they are free, and could be educated; they are good at business and the country will turn.
	What most perturbs me is the attitude of outside countries towards the junta. The junta does not involve a pleasant or good set-up, but to keep slanging it is perhaps not the best way forward. We need to engage with it and, as they say, to get stuck into it. Merely making rude remarks is not the best approach.
	In my experience from other parts of the world, in any government and military junta there are internal schisms. If we could get in among the junta and talk, we might find that people in it hold different views, although they enjoy the perks that go with the job. For that reason, I say to the Minister—I believe that she will agree—that we have an outstanding ambassador in Rangoon (Yandong) and a very small staff. I do not expect her to answer my point but I hope that she will take note of it. I wonder, for the task that we have, whether our embassy is set up to deal with a very difficult situation. I leave that point at that; there could be some improvement. A penny-pinching attitude, from which we all suffer today, is not the right way to go about an embassy in Rangoon, particularly now. I say that because every Burmese one meets, whether he is outside the country or inside it—I have knowledge of both—expects us, the British, to take a lead in fighting for his freedom and allowing democracy to take its course.
	I understand—the Minister may correct me—that a mission from Europe will go to the country shortly. If it is of any help, I respectfully say that I hope that the mission will not be enormous. I hope that the mission will be small and very well targeted when it meets the junta, and that the team that is going out will have clear objectives. The aims and objectives should be properly settled among the team before it arrives.
	I hope that we, the British, will take some part in that and that we will take a lead for the reasons that I gave. The frightened, beaten and cowed population of Burma today look to us to help them. It would be very wrong of us if we did not take a prime role in ensuring the future democracy of Myanmar.
	Tan Sri Razali Ismail, the United Nations representative, is having great difficulty getting to see the military junta and Daw Suu Kyi. I do not believe that that has been mentioned; the noble Baroness may have done so. We must support him in every way; he has the most difficult job. In my conversations with him in Kuala Lumpur, it was clear that he has a tough assignment and needs every help. We, the British, know how to help him.
	One cannot help but admire Daw Suu Kyi. I understand, after Mr Razali met her—after great difficulty—that she is supposed to be in a government guest house and well looked after. Do we have any news on where she actually is? Is she safe? I have known too many nations of this ilk that have referred to a government guest house when it is really a dungeon.
	A further matter—I hope that the Foreign and Commonwealth Office, in view of all its different responsibilities, will put Burma, or Myanmar, high on its list.

Baroness Park of Monmouth: My Lords, I shall differ to some degree from the noble Viscount, Lord Slim, much as I respect his special knowledge. Something must be done to secure the freedom, and the freedom to contribute to the political life of her country, of that remarkable woman Aung San Suu Kyi. Here is a Nobel prizewinner, the leader of a party elected by the people by an overwhelming majority 13 years ago, and still widely supported, held as a prisoner by a ruthless, unelected and antediluvian military junta. This was a cynical but not unexpected act by a government which feels threatened by any sign of political freedom.
	The EU moved, rightly, to secure and agree a common position which limits travel abroad by the junta and intends to freeze their assets outside the country. I was glad to hear, I am ashamed to say for the first time, that there is to be an EU mission there. If we are to judge by similar procedures on Zimbabwe this is unlikely to prove effective. Meanwhile the Secretary of State has expressed our grave concern to the Burmese Ambassador in London and I am delighted to see that the US has put in place some strong sanctions. I hope that we shall imitate them as far as we can.
	The Burmese generals have defied the UN by putting into custody the one political leader who has true and widespread popular support. The only people that she needs protection from are the tyrants who seized her with violence. Unfortunately, although the EU and the UN can, and I hope will, use economic and political pressure to some degree, those best placed to act politically are the ASEAN powers and China. Burma will take over the presidency of ASEAN in 2006. What can the UK, the UN and the EU do to cause ASEAN to act to bring about Aung San Suu Kyi's immediate release and the resumption of talks in a safe situation? I entirely agree that it would be appropriate for the ASEAN countries to be speaking behind the scenes. That is what I hope they are doing, but we need to be sure that they are doing that. We have seen in Zimbabwe that we tend to hide behind the idea that quiet diplomacy must not be interrupted and embarrassed by any public acts. In this case our country needs to be as public as possible.
	Economic prosperity, political stability and the rule of law in Burma can only be in the interests of her neighbours and of ASEAN, but that begs the question of the agenda of the opium traders and of some oil and gas producers and consumers. We could do something there. The military regime in Burma lives by the profits it makes from the production of opium and the manufacture of heroin and amphetamines. There is evidence that the Chinese are playing an active part inside Burma in the extraction of heroin from opium. The noble and brave Baroness, Lady Cox, has testified many times to what this beastly regime is doing to its people while, with all the immense revenues that they are securing, they are providing no schools, no clinics and no medical care. They rule by violence, and they are turning the people into addicts. Long-term damage will be very hard to put right. That is where I differ from the noble Viscount, Lord Slim, in that we have to be heard to be speaking out by the people of Burma.
	I hope the Government can tell us tonight that we shall be strongly supporting the Americans and urging the Security Council to withdraw the UN representative if Aung San Suu Kyi is not instantly released, and allowed to resume her constructive political dialogue with the regime. I support the idea of some kind of human rights tribunal, but in my experience, that is a long way off. Efforts to secure action to help the people of Zimbabwe, suffering under a similar murderous regime, have been thwarted in the UN by the concerted action of the African Union. I hope the many countries who condemn the Burmese junta will combine to cause the ASEAN countries, and especially China, to act against Burma, both through the UN and separately. It is not enough for ASEAN just to call for the release of Aung San Suu Kyi. She must be free to resume her political activities. As for the UN, there is little point in a vast international organisation if it cannot protect the weak and the victims of tyranny or, at any rate, be seen to try to do so.
	Quiet diplomacy is much too comfortable. If the UN allows its representatives to be flouted, as Mr Razai: has been, it is buying time for the junta to get away with total inaction. Mr Razai: represents a world organisation, and he should have been asked to refuse publicly to accept anything but the instant release into his care of Aung San Suu Kyi. Who could speak for the people of Burma, if not the UN? We and the Americans must, with the EU, immediately act to cut off the overseas resources of the junta, bring pressure to bear on the oil companies and the users of Burma's oil and gas, and try to secure some action from China. That will probably have to be done behind the scenes.
	It is a mockery to have an international body such as the UN, which includes an expensive Human Rights Commission, and which purports to stand for the freedom of peoples to choose their governments and to live in peace, doing nothing visible and effective. That is largely because such groups as the African Union, although I hope not ASEAN, are not prepared to act or to allow action against members of the new trade union of selfish, third world leaders who care very little about their people and a lot about the personal power of the leaders themselves.
	We have a particular duty to press for this, because we should never forget the courageous behaviour of our wartime allies in Burma, especially the Karen. I heard them described only yesterday by an old friend, who was once a young officer in the 14th Army in Burma, fighting the Japanese, as the bravest people he ever knew, loyal and steadfast beyond belief. We must not fail if there is anything we could do to give them a voice, and free them from a tyranny that does not even pretend to be caring for its people.

Lord Chan: My Lords, I, too, congratulate the noble Baroness, Lady Cox, on introducing this timely debate on Burma. We should remember that the country has been suffering from internal warfare and military oppression for more than 30 years.
	Last Thursday, the democratically elected leader of Burma, Aung San Suu Kyi, celebrated her 58th birthday in prison. She has been either under house arrest or confined in prison for most of the past 14 years. The National League for Democracy, the political party she leads, has been banned for the same period.
	Elected members of parliament and other pro-democracy supporters have been forced to flee. Many of those who stayed were arrested, tortured or killed by the military dictatorship. Burma's military dictatorship spends more than half the national budget on arms while the people of Burma live in poverty. Apart from ruling Burma without a mandate, the army has adopted a strategy for destabilising and terrorising the ethnic minority populations, as has been described by the noble Baroness, Lady Cox. I have visited Mizoram whose people, the Mizos, also live in northern Burma.
	The Karen people, living in a discrete state bordering Thailand, have been savagely treated. The Burmese army assaults Karen villages with mortars and machine gun fire, setting homes on fire and looting the possessions of these poor villagers. Landmines are then scattered around the village, forcing their residents to flee. These atrocities are even worse because they affect mainly women and children. Women are murdered even when pregnant and children wounded and maimed by shrapnel from landmines.
	The war is one of genocide and ethnic cleansing perpetrated by the army against ethnic minorities in Burma as well as anyone who supports and cares for these ethnic minorities. At any moment, all villagers can be uprooted and forced to flee their homes with only what is on their backs.
	Families have been separated due to persecution by the army. As a consequence, the number of orphans, single-parent families and families with missing children has increased. Some Karen parents have seen their children burned alive by the army.
	In addition to the statistics identified by the noble Baroness, Lady Cox, more than 1 million refugees from Burma have fled to neighbouring countries. One hundred and fifty thousand are in refugee camps in Thailand and Bangladesh. The rest are scattered. In the camps, refugees have the opportunity for education beyond high school, and freedom from religious and other types of persecution. In the refugee camps, many non-governmental organisations are taking care of the health, food and other needs of the refugees. I declare my support for a Christian NGO based in Chiang Mai, Thailand, that devotes itself to helping ethnic minorities in Burma.
	Ten ethnic minority groups in Burma joined to form the Ethnic Nationalities Consultation in November 2002 in order actively to work on the problems of narcotics, internally displaced people and human rights violations by the Burma dictators. But they need help from governments in Europe. As Her Majesty's Government have historic links with Burma, we should use them to influence the military rulers through dialogue and to urge the ASEAN countries to press Burma's military rulers to change their ways. If this does not lead to corrective action, I join other noble Lords in urging Her Majesty's Government to impose economic sanctions on Burma by advising British companies not to support the military government through trade, tourism and development aid.

Lord Avebury: My Lords, I join all noble Lords who have expressed congratulations to the noble Baroness, Lady Cox. As the noble Lord, Lord Alton, said, she is an inspiration to us all. I congratulate her on her timing in securing the debate because we are still reeling with shock and dismay on hearing the dreadful news of the armed attack on Aung San Suu Kyi and her colleagues on 30th May. This appalling crime has been condemned throughout the world, including unprecedented statements from ASEAN and Beijing. However, exactly what happened is still unclear because Aung San Suu Kyi is being held incommunicado in the notorious Insein prison, according to the Foreign Office Minister, Mike O'Brien, whose forthright comments last Thursday we welcomed. The survivors are also in prison and cannot speak about their experiences.
	We know that the government instigated the attack, as the noble Lord, Lord Faulkner, explained, and that somewhere between 60 and 100 people were killed. Their bodies were burned and many were injured. Immediately afterwards, NLD offices throughout the country were closed and hundreds of supporters were arrested.
	It is difficult to see how the policy of engagement advocated by the noble Viscount, Lord Slim, and pursued by the UN for the past two years can be continued in these circumstances. For example, before the International Labour Conference this month, the ILO had reached agreement with the Government of Myanmar for the appointment of a facilitator to assist the victims of forced labour, and for a plan of action which was to include a pilot road-building project, alternatives to the use of forced labour, and "information and awareness raising".
	Can it be that in spite of the very slow progress by Myanmar towards compliance with the Forced Labour Convention, and despite the events of May 30th, the ILO intends to carry on with this programme? I might ask the same question of the UN office on drugs and crime, which has been co-operating with the Government of Myamnar in trying to eliminate the opium poppy cultivation on which 350,000 households rely for their main income, but which also provides a valuable source of revenue to the junta itself.
	We note that the EU has imposed tighter sanctions, added some of the generals' cronies to the travel-ban list, and frozen some of their assets. These steps are welcome, but they are not proportionate to the regime's offences. This latest unprovoked assault comes on top of 13 years of oppression and persecution of the NLD—since the party won the 1990 election. There are 1,500 political prisoners, and hundreds of thousands of victims of the forced labour programme, and of the military operations against ethnic minorities which we have heard so vividly described. The programme of child soldiers is especially appalling and pernicious, and requires special attention when we decide what action we are to take. The junta has so far been impervious to the appeals of the UN Secretary-General, repeated again today, to release Aung San Suu Kyi and enter into a genuine political dialogue with the NLD. The UN special envoy, Mr Razali Ismail, has said that the only thing to make the generals sit up and listen would be the threat of UN sanctions, which have not been seen as a practical option until now because of lack of support from China. However, many of your Lordships have said that the time has come when we should explore this possibility.
	The situation may now have changed. We should at least try out a draft resolution on mandatory sanctions on other members of the Security Council to see whether we could get agreement on a measure that would cut off Burmese exports of textiles, energy, gems and timber, and block investment and tourism, all of which earn foreign currency for the regime while the people languish in misery. If we cannot get support for UN action, we should at least try to get a common policy on tougher measures with the United States and Japan.

Lord Astor of Hever: My Lords, the House will be grateful to my noble friend Lady Cox for raising again the important issue of Burma. Tonight the House has again united in supporting her.
	Last month, with the vicious ambush described by the noble Lord, Lord Faulkner, Burma's military dictatorship ended any pretence that it was ever genuine about reform. I understand that Daw Suu Kyi is being held in a two-room hut in Insein Prison, Rangoon. James Mawdsley was kept in a building close to the huts for three months in 1998, and tells me that it was absolute hell. There is a world of difference between house arrest and Insein Prison. The ICRC is not allowed to visit Daw Suu Kyi, and itself does not know the exact number of people being detained so it has to accept the figure given by the SPDC.
	Last December the Minister was commendably robust in her winding-up speech to another excellent debate on Burma. The House will be looking for some strong words again tonight. The time has come to turn up the pressure on the SPDC. Can the noble Baroness confirm that Her Majesty's Government have called for a full account of what happened that day; for Daw Suu Kyi and the other leaders of the NLD—gaoled by the SPDC before and after the attack—to be released from confinement of any kind; and for the NLD to be permitted to reopen their offices? The regime's strategy of re-arresting Daw Suu Kyi is to make her release, rather than democratic reform, the focus of international pressure. What assurance will the Government give that pressure will be stepped up if she is released but reform is not forthcoming?
	We must take measures to cut off the regime's supplies and support without harming the people whom we are trying to help. The EU continues to lag far behind US policy. In 1997 the US banned all new investment in Burma. As my noble friend Lady Cox said, the US looks likely to impose new trade sanctions that would ban imports from Burma, extend the visa ban against those supporting the SPDC, freeze Burma's assets in US banks and require the Bush administration to oppose international loans to the country. The Senate vote on the sanctions legislation was 97 to one in favour—a greater cross-party consensus than on any other foreign policy issue. Europe's feeble response, in contrast, has been to extend a visa ban and asset freeze against the regime.
	The state department has already extended visa restrictions to include all officials of an organisation related to the junta—the Union Solidarity and Development Association—and the managers of state-run enterprises so that they and their families can be banned as well. Will Her Majesty's Government encourage the EU to place restrictions on travel-related transactions that benefit the SPDC and its supporters?
	The US Government have also hinted that they will ask the UN Security Council to deal with the case of Burma. If the UK took the initiative at this stage, the added momentum might succeed in getting Security Council action on Burma. The UN envoy Razali has said publicly—the noble Lord, Lord Avebury, made this point—that the only thing that would make the generals sit up and listen is the threat of UN Security Council sanctions.
	Will Her Majesty's Government, therefore, as a permanent member of the UN Security Council, take Burma to the council and push for the imposition of targeted sanctions to include an investment ban, an arms embargo and a ban on certain exports, including oil, gas, gems, minerals and garments?
	Ending on a positive note, I welcome growing interest and measures taken by the outside world to curb the regime. Japan, Burma's largest single aid donor—excluding Rangoon's patron China—also warned it could cut off millions of dollars in assistance if the regime failed to free Daw Suu Kyi and take steps towards political change. The Association of South-East Asian Nations' unprecedented call for a "peaceful transition to democracy" in Burma is a break from the long-standing tradition of non-interference that has allowed Burma to participate in ASEAN meetings without concern that its poor human rights record or inept economic management would be criticised.

Baroness Crawley: My Lords, I add my thanks to the noble and brave Baroness, Lady Cox, for the opportunity that she has given us for a serious debate on the extremely grave situation in Burma and the Government's response to it. I fully agree with much of what has been said by noble Lords in a number of moving and passionate speeches.
	When we last debated Burma in this House on 3rd December I referred to some very modest positive developments within the country and hoped that that would be a signal of further progress to follow. Sadly, that is not the case. Instead, senior general Than Shwe seems set on a course of negative, ham-fisted confrontation with the democratic opposition which will be of no benefit to the people of Burma whatever. As my noble friend Lord Faulkner of Worcester so effectively described, the outrageous armed attack on Daw Aung San Suu Kyi and her National League for Democracy supporters on 30th May was clearly organised and perpetrated by elements of the military regime. It was the culmination of several months of carefully orchestrated and well-documented violence and intimidation.
	Credible eyewitness reports indicate that dozens of people were killed and many injured, far in excess of the official figures put out by the authorities—as the noble Lord, Lord Astor, mentioned. Since that event, scores of people, including members of the National League for Democracy, have been detained and many more are in hiding in fear of their lives. The regime also closed the offices of the NLD throughout Burma, and, temporarily, universities and schools.
	As the noble Lords, Lord Avebury and Lord Astor, and other noble Lords said, we have received reliable reports that Aung San Suu Kyi is now being held in Rangoon's notorious Insein prison, under section 10(a) of the State Protection Law 1975. This draconian law allows for detention without access to family or lawyers for up to five years, with no appeal. This is a totally unacceptable way to treat anyone pursuing peaceful, political aims.
	These reports make a mockery of the recent claims in Phnom Penh by the Burmese Foreign Minister that Aung San Suu Kyi is being detained simply for her own protection, and has led to our repeated calls for her immediate release, and the release of all political prisoners. On 19th June 2003, Aung San Suu Kyi's 58th birthday, my honourable friend Mike O'Brien repeatedly tried to telephone Aung San Suu Kyi but without success. The Deputy Foreign Minister was unwilling to talk to him. This further belies the claim that her detention is for her own protection. On 20th June he summoned the Burmese Ambassador and spoke in strong terms. He plans to see him again on 25th June.
	The reasons for the regime's despicable actions are obvious. Since her release from house arrest in May 2002, Aung San Suu Kyi has made a number of trips around Burma to reopen closed NLD offices and open new ones. Wherever she has gone, thousands of supporters have turned out to greet her and listen to her speeches, despite harassment and threats from the regime and its paid thugs. The courage and support of those supporters has shown the military dictators that the results of the 1990 elections, the first for 30 years, when the NLD won a landslide victory, remain a true reflection of who should rightly be in power in Burma.
	The regime's crass behaviour is sadly nothing new. Before her release last year, Aung San Suu Kyi had been under house arrest for a total of almost eight years. At the same time as attacking Aung San Suu Kyi and her supporters, and then gaoling her in its desperate efforts to remain in political power, the junta is also bankrupting the country's economy. As the noble Lord, Lord Chan, reminded us, Burma's health and education systems are in a terrible state because the regime invests so little in them. A total of just 0.5 per cent GDP was spent on both sectors in 1999–2000. The regime chose instead to spend what money it has on weapons and equipment for its 500,000 strong army. It is a stark example of how little the junta cares for the people of Burma.
	It is tragic to see a beautiful country with so much potential brought to its knees by a lousy government. Burma was once rightly called "the rice bowl of Asia". Rangoon's university had a high reputation and attracted students from all over the region. Now students rarely turn up for classes. If they do, they risk finding the doors barred, as the military's knee-jerk reaction has been to close schools and universities whenever there is any sign of trouble.
	As I stated in the December debate, human rights abuses, violence and repression continue throughout the country. As the noble Baroness, Lady Cox, and the noble Lord, Lord Alton, reminded us, Burma's ethnic nationalities suffer in particular, whether they be Muslim Rohingyas, Christian Karen or Buddhist Shan. Religion is no bar to brutality in Burma. A wide range of international NGOs regularly publish credible accounts of rape; torture; extra-judicial killings; forced relocation; the use of child soldiers; forced labour; denial of assembly; denial of expression; denial of movement; and discrimination on the grounds of religion and ethnicity. These accounts are dismissed out of hand by the Burmese regime. I say to the noble Lord, Lord Alton, and other noble Lords, that we ensure that those reports are brought to the attention of the international community and the United Nations. The regime's commitment to the international values and human rights standards of the UN—an organisation once headed by a distinguished Burmese statesman, U That—is woefully inadequate. Successive UN resolutions condemning abuse, championed by the UK, have demonstrated that.
	We sponsored the human rights resolution at the UNCHR in April 2003, condemning human rights violations in Burma and expressing concern over discrimination on the basis of religious and ethnic background. The UN Rapporteur on Human Rights in Burma, Sergio Pinheiro, has his work cut out. We fully support his efforts, and those of the International Labour Organisation, to get the regime to address the problems of forced labour through their resident representative in Rangoon.
	The noble Baroness, Lady Park, and other noble Lords referred to the ASEAN countries. Even Burma's ASEAN neighbours are now recognising that the grave situation in Burma must be addressed. In an unprecedented move, and contrary to their earlier stance of non-interference, foreign ministers discussed the internal situation in Burma at their meeting in Phnom Penh on 17th June and called for the release of Aung San Suu Kyi and her NLD colleagues. In their final communique, they urged the Burmese regime to resume dialogue with all parties concerned to promote national reconciliation and a peaceful transition to democracy. They also reaffirmed support for the efforts of the UN Secretary-General's special representative, Tan Sri Razali Ismail. We welcome very strongly ASEAN's statement. No-one in Phnom Penh was convinced by the claim of Burma's Foreign Minister that his government are still committed to dialogue and a transition to democracy.
	I assure the noble Viscount, Lord Slim, who speaks with great experience on this grave matter, that the UK remains at the forefront of international action in continuing to press for the return of human rights and democracy to Burma. We work very closely with our EU partners. The EU's core policy on Burma is contained in a common position, first agreed in 1996. It includes an arms embargo, a ban on defence links, a ban on high-level bilateral government visits, a ban on non-humanitarian aid, a ban on the supply of equipment that might be used for internal repression or terrorism, and an asset freeze and visa ban on members of the regime and military. In response to the current situation, the EU Foreign Ministers agreed on 16th June to introduce further measures extending the visa ban and assets freeze on members of the regime, their families and associates, and tightening the arms embargo.
	We fully, actively and loudly support the excellent work carried out by the UN Secretary General's special representative to Burma, Tan Sri Razali Ismail. We remain very active in seeking to persuade Burma's neighbours, China, India and Thailand, as well as Japan and other relevant countries around the world, to do what they can to bring pressure to bear on the regime to change its ways.
	The noble Baroness, Lady Cox, and other noble Lords mentioned the hard-hitting article by Colin Powell. President Bush also criticised the Burmese regime and asked whether we would endorse the strong criticism by the US. On behalf of the Government, I very much welcome that strong engagement by the United States.
	The UK does not encourage trade, investment or any tourism in Burma. My noble friend Lord Faulkner asked about the Government's position on BAT. I am pleased to tell him that my honourable friend Mike O'Brien will be meeting the chairman of BAT very soon to discuss the situation.
	Noble Lords asked a number of questions which I shall rapidly go through; in respect of those which I do not get to I shall ensure that noble Lords receive full written answers. The noble Baroness, Lady Cox, and the noble Lord, Lord Avebury, asked whether HMG are considering similar measures to those proposed by the US. We have no powers to impose unilateral financial sanctions except in limited cases where the target regime is taking or is likely to take action to the detriment of the United Kingdom. Sanctions should not be imposed merely as a symbolic gesture but should be designed to have real impact. That is why we prefer multilateral action.
	The noble Baroness also asked about the proposal for Thailand to act as a mediator. The United Kingdom would encourage tripartite talks if all parties were genuinely represented and fully involved in the process. She also asked about pressure on ASEAN. I hope that I have covered that in my speech. In particular, the noble Baroness criticised the funding of environmental projects. We currently provide funding through carefully selected agencies to protect and conserve biological and cultural diversity. It includes projects on wildlife, forest conservation and also on creating capacity within local communities in some of the poorest areas of Burma. In 2003–04, our assistance will amount to about £122,000. I shall ensure that the noble Baroness receives written answers for her other questions.
	My noble friend Lord Faulkner criticised the Government on the basis of travel advice and the website. UK policy is not to support or encourage tourism in Burma. The FCO country profile on the website makes that clear. We bring attention to the human rights situation in Burma. However, the separate FCO travel advice must be objective, based on risks to British visitors and not used as a political device. I ask other noble Lords for their patience in waiting for written answers from me.
	Finally, I repeat something that we have made very clear to the Burmese regime on many occasions. We stand prepared to respond proportionately and we support a genuine transition to civilian rule in Burma. We must start with the immediate release of Daw Aung San Suu Kyi, her fellow NLD detainees and all political prisoners. At the same time, the regime should be in no doubt about our resolve to press for further measures if these steps are not taken very soon.

Anti-social Behaviour Bill

Brought from the Commons; read a first time, and ordered to be printed.

Consolidated Fund (Appropriation) (No. 2) Bill

Brought from the Commons endorsed with the certificate of the Speaker that the Bill is a Money Bill, and read a first time.

Water Bill [HL]

Further consideration of amendments on Report resumed on Schedule 4.

Baroness Byford: moved Amendment No. 118:
	Page 134, line 42, at end insert—
	"( ) the Consumer Council for Water;"

Baroness Byford: My Lords, in moving the amendment I shall speak also to Amendment No. 121. The amendment is supported by the Liberal Democrat Benches. It asks that the consumer council for water should be included in Schedule 4.
	Amendment No. 121 deals specifically with the codes and obligations that are to be placed on licensed water suppliers, affecting their conduct. I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, as the noble Baroness said, we have put our names to the amendments so obviously we support them.

Baroness Farrington of Ribbleton: My Lords, Amendment No. 118 would require the Secretary of State or the Assembly to consult the council when proposing to alter the eligibility threshold for competition. The Secretary of State and the Assembly are committed to full consultation on most of the decisions they make. In this case, other than the authority, which has to operate the competition regime, important parties such as the Drinking Water Inspectorate and the Environment Agency, which will be consulted along with the council, are also not listed in the Bill. There is no reason to single out the consumer council for water, especially when the effects of the competition threshold can be just as significant to the interests of the other regulators.
	Amendment No. 121 proposes amendments to the clause on standard conditions of water supply licenses. While we agree with the principle that the council should be consulted where appropriate, we do not think the amendment is necessary. If obligations are being imposed, the proposals are likely to be a modification of the standard conditions themselves. Amendment No. 122, which we will be debating next, will ensure that the council is consulted in such cases.
	If there were codes to aid or govern the practice of licensed suppliers, we would expect appropriate consultation. In most cases that would involve consultation with the council, but there may be technical issues where consultation with the council would not be required. It would be an unnecessary burden on the council and the authority to insist on inappropriate consultation.
	The second part of the amendment would require directors or representatives of the companies that are licensed water suppliers to attend council committee meetings. That is not necessary. The current obligation for undertakers to attend committee meetings is included in the standard appointment condition and is therefore not covered in primary legislation. We would expect a similar licence condition to be applied to licensed water suppliers. That will be consulted on. For those reasons I hope that the noble Baroness, Lady Byford, will not press the amendment.

Baroness O'Cathain: My Lords, before the Minister sits down, I want to tease out why the consumer council for water should not be mentioned in the Bill. The Bill is very technical, but water is a consumer issue. The consumer does not get much say in any of this. The consumer council for water is an important body. The current WaterVoice people are very helpful. They get deeply involved in all the issues of the organisation and they should be consulted.
	I should also like an explanation from my noble friend Lady Byford of the use of the word "directors" in the second part of Amendment No. 121.

Baroness Farrington of Ribbleton: My Lords, I could not agree more that the consumer council for water is very important. I am sure that the noble Baroness, Lady O'Cathain, would agree that it is also important to recognise the role of the Drinking Water Inspectorate and the Environment Agency. I hope that that answer satisfies the noble Baroness. If not, I would be only too pleased to clarify the position between now and the next stage.

Baroness Byford: My Lords, I am grateful to the noble Baroness, Lady Farrington, for that clarification. We continue to feel that the water council should be defined in the clause. She referred to the Drinking Water Inspectorate and the Environment Agency. If she feels that the consumer council, in having its name in the Bill, would take priority over those two bodies, perhaps the Government should consider adding all three names. In that way, all three bodies could be consulted. The noble Baroness suggested earlier that that was not necessary and that the bodies were already in the Bill.

Baroness Farrington of Ribbleton: My Lords, I believe that I indicated that those bodies were included as appropriate, rather than as a blanket inclusion on every occasion.

Baroness Byford: My Lords, I must reconsider the matter.
	The Minister was unhappy about Amendment No. 121, especially paragraph (b), which deals with directors and other representatives. In answer to my noble friend Lady O'Cathain, when we drafted the amendment we had not specified whether the directors were executive or non-executive. That is something that I need to clarify.
	I apologise to the House for being somewhat unprepared at the restart. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Farrington of Ribbleton: moved Amendment No. 119:
	Page 136, line 19, at end insert—
	"( ) on the Council;"

Baroness Farrington of Ribbleton: My Lords, noble Lords from the Opposition Benches have tabled amendments that are broadly similar to Government amendments. We said in Committee that we would consider such amendments alongside the intention to extend the council's remit to monitoring licensed water suppliers. We have considered the matter further and agree that the council needs to be kept informed of new and amended licences.
	The government amendments differ from the otherwise identical amendments tabled by both opposition parties, in that we have used the term "Council", which is the shortened name of the consumer council for water throughout the Bill. Given that we all have the same objectives, I hope that noble Lords will withdraw their amendments in favour of the Government's, in those cases where there is a slight difference in drafting or placement. I beg to move.

Baroness Byford: My Lords, I thank the Minister for responding to the long discussions that we had in Committee. Brevity is always an advantage and, although I hate giving way, on this occasion the Government have the edge on us. We are quite happy to accept their amendments referring to the "Council", which obviously means the consumer council for water.

Baroness Miller of Chilthorne Domer: My Lords, we thank the Government for accepting our points.

On Question, amendment agreed to.
	[Amendments Nos. 120 and 121 not moved.]

Baroness Farrington of Ribbleton: moved Amendment No. 122:
	Page 140, line 7, at end insert—
	"( ) the Council;"
	On Question, amendment agreed to.
	[Amendment No. 123 not moved.]

Baroness Farrington of Ribbleton: moved Amendment No. 124:
	Page 140, line 46, at end insert—
	"( ) the Council;"
	On Question, amendment agreed to.
	[Amendment No. 125 not moved.]

Baroness Farrington of Ribbleton: moved Amendment No. 126:
	Page 143, line 21, at end insert—
	"( ) the Council;"
	On Question, amendment agreed to.
	[Amendment No. 127 not moved.]

Baroness Farrington of Ribbleton: moved Amendments Nos. 128 and 129:
	Page 146, line 33, at end insert—
	"( ) the Council;" Page 148, line 23, at end insert—
	"( ) the Council;"
	On Question, amendments agreed to.
	[Amendment No. 130 not moved.]

Baroness Farrington of Ribbleton: moved Amendment No. 131:
	Page 150, line 23, at end insert—
	"( ) the Council;"
	On Question, amendment agreed to.
	[Amendments Nos. 132 to 134 not moved.]

Lord Dixon-Smith: moved Amendment No. 135:
	Page 160, line 21, after "any" insert "quantifiable"

Lord Dixon-Smith: My Lords, Amendment No. 135 seeks to insert the word "quantifiable" into the question of costs, which is what this particular part of the Bill deals with—costs as between water suppliers and water companies.
	This is a slightly obscure but very important argument. I wish that I could abbreviate it but I regret that I cannot. A water undertaker—that is a major water company—loses a customer to a licensed water supplier who requests the undertaker to lay some pipes through which he will supply the undertaker's water to the undertaker's former customer. The undertaker is obliged to do so and charges the supplier accordingly. He is entitled to do so and that seems absolutely right.
	But at that point the supplier can put up an argument to the effect that the charge is not payable as there are balancing items as follows. The customer is planning to expand his operation and the undertaker would have had to lay an additional pipe in any event. Moreover, there would have had to be an increase in water treatment capacity as the undertaker's pipes are all for domestic quality whereas the supplier, because of the nature of the customer, can use pipes of a lower quality and a lower standard because the customer does not need drinking water quality but he has had to have it because that was the only supply he could get.
	This may sound like creative accounting gone mad but what we are dealing with is how we assess the nature of real costs. It is a complex question and the water undertaker could be obliged to pay costs which the water supplier could legitimately argue he would have had to undertake anyway. What we have sought to do is to insert a word which might help if one ever finds that kind of an argument arising between a water supplier and a water undertaker.
	I am sorry that the matter is so complex; I wish that it were not. But unfortunately I see no way round the matter. I see immense scope for fruitful argument employing all kinds of experts for a long time at some point in the future. I hope very much that the Minister in his response will be able to clarify what is otherwise a very unclear situation. I beg to move.

Lord Whitty: My Lords, I agree with the noble Lord's objectives but I do not think that the amendment is necessary. I understand the situation that he described. There could be all sorts of other complicated situations where one has to net off a cost or otherwise. I agree that only quantifiable benefits can be deducted from the undertaker's charges but they would have to be quantifiable if the regulator is able to identify them and calculate them. He will not be able to make a financial determination unless they are quantifiable. Therefore, the regulator is to a large extent already constrained by ensuring that the financial calculations can be made, so "quantifiable" is unnecessary in terms of determining what sum the regulator comes up with.
	As in so many discussions that the noble Lord and I have, it would not do any harm to add what an amendment would add—"quantifiable" in this case—in normal parlance. However, the lawyers will always say, "Don't use more words than you have to", although with a Bill this long he would be justified in challenging whether that was a general precept. Nevertheless, that is the view. If the sums are to be reduced to a financial calculation, clearly they have to be quantifiable in any case.

Lord Dixon-Smith: My Lords, I am grateful to the Minister for his explanation. I am not sure that it takes us any further forward, as it seems that the argument will be able to go on in all its intricacy and detail for a considerable time in a number of such cases. That said, I am quite prepared to accept that "quantifiable" may not be the right word. It may be that we could find a better one, or a better way of making the point that we want to make. For now, I shall study his explanation with considerable care, think about it and see whether we can do anything at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Dixon-Smith: moved Amendment No. 136:
	Page 161, line 8, leave out "Secretary of State" and insert "Chief Inspector of Drinking Water"

Lord Dixon-Smith: My Lords, the amendment is grouped with Amendments Nos. 137 and 138. They all have the same effect, which is to leave out the Secretary of State. We have no particular wish to do him out of a job, but we think that the chief inspector of drinking water or the chief inspector of drinking water for Wales is more appropriate in this instance.
	The amendment arises out of a debate on Amendment No. 168ZF, believe it or not, in Grand Committee on 10th April, as reported at col. GC 75. The Minister explained that the wording to which we had objected was a legislative drafting device to enable the authority to consult the Drinking Water Inspectorate, which reports to the Secretary of State. Clause 38 substitutes a new section in the Water Industry Act that specifically gives the Secretary of State or, as the case may be, the authority the powers and duties covered in that Act as general duties in respect of the water industry. It seems ridiculous to lay down such a general duties clause and then say that the authority cannot consult a department reporting to the Secretary of State without his specific permission.
	We think that that is very peculiar. It is a very sophistic argument, and we think that our amendment would lead to a considerably clearer situation in the Bill. It would also leave the Secretary of State secure as a final court of appeal, so that if there were any need for such a thing we could speed up the clarification of complaints. If the Secretary of State were involved at an earlier stage, that would be more difficult. I beg to move.

Lord Whitty: My Lords, I am sorry that the noble Lord viewed the previous explanations as sophistry, but I agree that they are hugely legalistic. The problem is that the Drinking Water Inspectorate does not exist as a legal entity, and therefore cannot of itself have duties. The Secretary of State has duties that are then conferred on the chief inspector of drinking water. Although one can designate in legislation the fact that the Drinking Water Inspectorate could be consulted, that does not impose a duty on it. It is a duty on someone else to consult it. The legal position is that duties cannot be conferred on something which does not have a legal personality. Hence the only way of doing it is to designate the Secretary of State. In commonsense terms, of course, there is a problem in that the Secretary of State can, in certain circumstances, appear later in some of the procedures. But we cannot so designate the Drinking Water Inspectorate under the current structure and conventions.
	So while in a sense I accept the logic of the noble Lord's approach, I cannot accept the statutory form in which he is putting it.

Lord Dixon-Smith: My Lords, before the Minister sits down, this is a legislative Chamber and it can establish the precedent that it wishes to establish. If it wants to establish the Drinking Water Inspectorate as a legal entity, surely it can do so. It may be that this amendment is not the appropriate way to do so and that a different amendment is required in order to achieve that, but I ask the Minister why that cannot be done. It seems to me that it would be helpful if it were done.

Lord Whitty: My Lords, it can, of course, be done, but it would require a definition of the inspectorate as a body with its own identity rather than an amendment in one particular respect. The noble Lord would therefore have to come forward or force the Government to come forward with a large number of substantive amendments. At the moment, the Drinking Water Inspectorate is part of the department and is no different from any other Civil Service branch which cannot be designated as a legal entity—the Secretary of State has to be designated in terms of defining the responsibility of the department.

Baroness Farrington of Ribbleton: My Lords, I was flexible with my noble friend and with the noble Lord, Lord Dixon-Smith. But this is Report stage; once the Minister sits down questions cannot be asked.

Lord Dixon-Smith: My Lords, I accept the noble Baroness's rebuke. She is perfectly correct. But it does seem to me that we have an acknowledged anomaly, in the sense that the existing situation is not perfect, but we do not have the appropriate amendment to rectify it. The only question is, therefore, whether the Opposition have to carry out the task of drafting an appropriate amendment and almost certainly get it wrong, or whether we invite the Minister to tackle the issue and perhaps have cold towels round his drafting clerks for a number of nights, and they might or might not come up with the right answer, or might not be able to do it in the time available.
	The only thing that seems certain in this situation is that the right thing for me to do at the moment is to withdraw the amendment. However, I should welcome an opportunity to discuss it with the Minister subsequently. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 137 and 138 not moved.]

Baroness Farrington of Ribbleton: moved Amendments Nos. 139 and 140:
	Page 164, line 23, leave out "a" and insert "the"
	Page 165, line 13, leave out from "agreement" to end of line 15 and insert "for a supply of water in bulk"
	On Question, amendments agreed to.

Baroness Byford: moved Amendment No. 141:
	Page 166, line 13, at beginning insert "shall lay a copy of the notice in each House of Parliament subject to objection within 40 days,"

Baroness Byford: My Lords, this amendment relates to prohibitions and exemptions. In Committee, we moved a series of amendments designed to probe the meaning of paragraphs 66I to 66K as laid down in Schedule 4. We were unhappy about the prohibition on the ability of water undertakers to prosecute anyone who used their systems to introduce water without permission. We were also unhappy that the Secretary of State could apparently authorise certain people or classes of people to make free of a water system.
	The responses that we received were unsatisfactory. It has subsequently been pointed out to me that the negative procedure already exists, but I invite the Minister who will reply to point me to it in the Bill. That would be hugely helpful. I should be glad to have clarification from the Minister. I beg to move.

Baroness Farrington of Ribbleton: My Lords, I fully understand that the noble Baroness, Lady Byford, seeks to ensure that the power to grant, by order, exemptions from the prohibition on persons supplying from or introducing water to the undertaker's supply system is subject to parliamentary scrutiny.
	I can confirm that an order under this section is already subject to the negative resolution procedure under subsection (6) of new Section 66L on page 168 of the Bill. I am very pleased to have been able to reassure the noble Baroness. I trust that she will be happy with the reply and feel able to withdraw the amendment.

Baroness Byford: My Lords, I am grateful to the Minister. It is quite difficult to get round the various parts of the Bill. However, with that confirmation, I am happy and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Schedule 8 [Minor and consequential amendments: licensing of water suppliers etc]:

Baroness Farrington of Ribbleton: moved Amendment No. 142:
	Page 184, line 36, at end insert—
	"( ) Section 174 of the Water Act 1989 (c. 15) (general restrictions on disclosure of information) is amended as follows.
	( ) In paragraph (b) of subsection (2), for "or a sewerage undertaker" there is substituted ", sewerage undertaker or company holding a licence under Chapter 1A of Part 2 of the Water Industry Act 1991".
	( ) In paragraph (c) of that subsection, for "203(1) or (2)" there is substituted "203(1), (1A), (2) or (2A)".
	( ) In subsection (6)(a), after "sewerage undertaker" there is inserted ", or with the carrying on by a company holding a licence under Chapter 1A of Part 2 of the Water Industry Act 1991 of activities under its licence,"."
	On Question, amendment agreed to.

Baroness Byford: moved Amendment No. 143:
	Page 187, line 16, leave out sub-paragraph (4).

Baroness Byford: My Lords, in moving Amendment No. 143, I shall speak also to Amendments Nos. 144 and 145. The sub-paragraph in question allows a licensed water supplier to transfer to another company or companies sufficient of its activities to protect a strategic supply. That will be done under a special administration order.
	I want to ask the Minister what safeguards there will be to ensure that the company receiving the privilege is worthy of it. Will the water undertaker play any part? The court may hear from the Secretary of State or the authority in regard to the licensed water supplier, but will the court hear submissions from anyone with regard to the replacement? Surely if a licensed water supplier contravenes regulations or goes out of business, the logical approach is to give back the right of supply to the water undertaker until a proper application can be dealt with from a new would-be licensed water supplier. That deals with Amendment No. 143.
	Amendment No. 144 concerns the ministerial explanation that encapsulates all my doubts about the reasons for this Bill and the way those reasons are being translated into action. At col. GC 82 of Hansard of 10th April the noble Baroness, Lady Farrington, explained that the Bill extends the duty that water undertakers already have to supply water to domestic customers outside their area. It restricts them to competing only through their associated companies and not directly. We discussed that matter earlier today.
	We now have a situation where water undertakers will lose their biggest customers to the licensed water suppliers to improve the competitiveness of the industry. Water undertakers will have an extended duty to supply on demand outside their area to non-domestic customers. However, water undertakers will compete outside their area only through their associated companies.
	Am I the only person in this House who believes that some convoluted thinking is involved here? Why cannot undertakers compete as themselves? The amendment as tabled is totally inadequate for changing something as profound as this, but I hope that the Minister will address seriously the comments that I have made in proposing the amendment and that she will provide some answers.
	I turn to Amendment No. 145. Our concern with this aspect of the Bill is that the water undertaker must pick up where the licensed supplier left off without necessarily being aware that it has left off. It may be possible to incorporate a legal duty on the supplier to inform the undertaker before abandoning the supply, but in some circumstances that one can think of, that would be the last thing that might happen.
	There seems to be a presumption that in all cases the supplier will be drawing a continuous, probably steady, stream of water from the undertaker. Will the Minister confirm that in all cases that will be so? Further, will the total supply come from a single undertaker? What is the possible involvement of, for example, the British Waterways Board? What are the chances of pipe supply coming from the Continent? In such an event, who would pick up the duty of continuation after a supplier had pulled out, and how would that duty be notified? I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, I appreciate the tabling of these amendments, which would clarify the situation. I hope that the Minister will give a good explanation because the system appears, as the noble Baroness said, to be very convoluted. It is one of the most impenetrable parts of the Bill.

Baroness Farrington of Ribbleton: My Lords, I feel rather inclined to agree that it is one of the more complex parts of the Bill. Amendment No. 143 deals with strategic supply and special administration as they apply to licensees. Its effect is to leave customers without the protection offered by special administration. The special administration provisions will protect customers from the failure of a licensee where the licensee's introduction of water to the undertaker's network is too large for the undertaker to make up the shortfall. Such significant introductions of water into the network will be designated as strategic supplies. If a licensee were to fail financially or be at risk of losing its licence, Ofwat or the Secretary of State can apply to the High Court to put the licensee into special administration.
	The special administrator would aim to continue the strategic input of water and to transfer it as a going concern to another supplier. The special administrator may either sell the contract for the provision of the supply to an undertaker or a licensed water supplier, depending upon who they decide is most suited immediately to take over the running of the strategic supply while providing a return to shareholders and creditors.
	The special administrator is appointed by the court. It considers who should be sold the contract for the supply. It could be an undertaker or a licensee with the approval of the Secretary of State or Ofwat. Supplies will be considered strategic only where, without them, the undertaker could not fulfil its obligations to supply customers.
	On Amendment No. 144, at present undertakers have a duty to supply customers outside their area for domestic purposes but not non-domestic purposes. We have sought to make the duty consistent for all supplies in that regard. The duty to supply will in the future also apply outside the undertaker's area only to customers who are not eligible for supply by a licensed water supplier. Undertakers will be allowed to compete outside their area only through their associated companies. That ensures that there is a clear boundary between the activities of the regulated undertaker and its associated company.
	On the question about the boundary between England and France, I shall write to the noble Baroness. I shall return to the matter in a moment. The non-domestic duty is further qualified; it will not apply if in making that supply and supplying all other customers, the undertaker would incur unreasonable expenditure. I hope that that satisfies the noble Baroness in relation to that amendment.
	I turn to Amendment No. 145, which would make the duty on the undertakers to provide an interim supply, under new Section 63AC, conditional on the relevant undertaker being aware that a supply from a licensed water supplier had ceased. The effect of that would be to stop the undertaker being able to charge for water that it had unknowingly supplied. We feel that that would not be equitable. We believe that the amendment was tabled in order to protect undertakers from being obliged to provide a supply, without notice, to customers whose licensed supplier failed them. In fact, the provisions are there for the protection of undertakers and customers as well.
	If a licensee fails to supply its customer, water will still continue to flow out of the undertaker's pipes at the customer's premises. This provision ensures that whether or not the undertaker is aware that the licensee had stopped making a supply, it is able to recover charges from a customer for the water supplied; it does not depend on the customer informing him.
	The customer is protected because, from the time of the licensee's failure, it has at least three months to make alternative arrangements for supply, either by another licensee or by the undertaker. After this period, the undertaker can choose to serve a disconnection notice if no other arrangements have been made. The undertaker is not required to maintain a standby water supply equivalent to the total supplied by the licensees in its area. It will be required to make an interim supply only for domestic needs, unless it has enough water to supply for other purposes.
	I tried, with some difficulty, to bring together three amendments that I am delighted were grouped together. If I have failed to answer any of the questions that have been raised, because, as the noble Baroness, Lady Byford, recognised, the matter is extremely complex, I shall be delighted to write to all noble Lords who have taken part.

Baroness Byford: My Lords, I am grateful to the Minister. I apologise to the House that I linked the amendments. The House may be grateful that I did, but it was an error. Unfortunately I had not looked at my master list. At this stage of the proceedings I should like to read carefully the response given by the Minister. I am still unsure why associates have to be used, as opposed to their own companies. I would be glad of further clarification. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 144 and 145 not moved.]

Lord Whitty: moved Amendment No. 145A:
	Page 196, line 45, at end insert—
	"In section 72 (contamination of water sources), in subsection (5), after paragraph (b) there is inserted "; and
	(c) any pipe or conduit of a licensed water supplier.""
	On Question, amendment agreed to.

Lord Geddes: My Lords, before calling Amendment No. 146, I must advise the House that there is a mistake on the Marshalled List. It should read:
	"Page 198, line 14, leave out first "or" and insert "and"".

Lord Whitty: moved Amendment No. 146:
	Page 198, line 14, leave out first "or" and insert "and"
	On Question, amendment agreed to.

Lord Whitty: moved Amendments Nos. 147 to 152:
	Page 198, line 25, leave out first "or" and insert "and"
	Page 200, line 29, at end insert—
	"( ) Section 162 (works in connection with metering) is amended as follows.
	( ) In subsection (1A), in paragraph (a) at the end there is inserted "or".
	( ) In that subsection, after paragraph (c) there is inserted "or
	(d) a licensed water supplier supplies water to those premises using the undertaker's supply system."
	( ) After that subsection there is inserted—
	"(1B) In subsection (1A)(d) above, the reference to the supply system of a water undertaker shall be construed in accordance with section 17B(5) above."" Page 200, line 31, at end insert—
	" ( ) Section 174 (offences of interference with works) is amended as follows.
	( ) After subsection (1) there is inserted—
	"(1A) Subject to subsection (2) below, if any person without the consent of the licensed water supplier—
	(a) intentionally or recklessly interferes with any pipe or any structure, installation or apparatus which—
	(i) is vested in any licensed water supplier (in the case of a pipe) or belongs to any such supplier (in any other case); and
	(ii) is used in connection with the carrying on by the supplier of the activities authorised by its licence; or
	(b) by any act or omission negligently interferes with any such pipe or with any such structure, installation or apparatus so as to damage it or so as to have an effect on its use or operation,
	that person shall be guilty of an offence and liable, on summary conviction, to a fine not exceeding level 3 on the standard scale."
	( ) In subsection (2)—
	(a) after "subsection (1)" there is inserted "or (1A)"; and
	(b) in paragraph (b)—
	(i) after "water undertaker" there is inserted "or licensed water supplier"; and
	(ii) in sub-paragraph (ii), for the words from "the stopcock was" to the end there is substituted "subsection (2A) below applies".
	( ) After that subsection there is inserted—
	"(2A) This subsection applies—
	(a) in the case of a stopcock belonging to a water undertaker, if the stopcock was closed otherwise than by the undertaker;
	(b) in the case of a stopcock belonging to a licensed water supplier—
	(i) if the stopcock was closed otherwise than by the supplier; or
	(ii) if the stopcock was closed by the supplier and the person in question for the purposes of subsection (2) above is the water undertaker whose supply system is used for the purpose of the supply made by the supplier,
	and in this subsection the reference to the supply system of a water undertaker shall be construed in accordance with section 17B(5) above."
	( ) In subsection (3), in paragraph (c), for "section" there is substituted "subsection".
	( ) After that subsection there is inserted—
	"(3A) Any person who, without the consent of the licensed water supplier—
	(a) attaches any pipe or apparatus to any pipe which is—
	(i) vested in a licensed water supplier; and
	(ii) used in connection with the carrying on by the supplier of the activities authorised by its licence;
	(b) attaches any pipe or apparatus to any service pipe which does not belong to such a supplier or a water undertaker but which is a pipe by means of which water is supplied by such a supplier to any premises;
	(c) makes any alteration in a service pipe by means of which water is so supplied, or in any apparatus attached to any such pipe; or
	(d) subject to subsection (4) below, uses any pipe or apparatus which has been attached or altered in contravention of this subsection,
	shall be guilty of an offence and liable, on summary conviction, to a fine not exceeding level 3 on the standard scale."
	( ) In subsection (4)—
	(a) after "subsection (3) above" there is inserted "or paragraph (d) of subsection (3A) above", and
	(b) for "that subsection" there is substituted "subsection (3) or (3A) above (as the case may require)".
	( ) After subsection (5) there is inserted—
	"(5A) If any person wilfully or negligently injures or suffers to be injured any water fitting which—
	(a) belongs to a licensed water supplier; and
	(b) is used in connection with the carrying on by the supplier of the activities authorised by its licence,
	he shall be guilty of an offence and liable, on summary conviction, to a fine not exceeding level 1 on the standard scale."
	( ) After subsection (8) there is inserted—
	"(8A) In this section "consumer"—
	(a) in relation to a supply of water provided by a water undertaker to any premises, means a person who is for the time being the person on whom liability to pay charges to the undertaker in respect of that supply of water would fall;
	(b) in relation to a supply of water provided by a licensed water supplier to any premises, means a person who is for the time being the person on whom liability to pay charges to the supplier in respect of that supply of water would fall."
	( ) In subsection (9), for ""consumer" and "water fitting" have the same meanings" there is substituted ""water fitting" has the same meaning"." Page 200, line 31, at end insert—
	"( ) Section 175 (offence of tampering with meter) is amended as follows.
	( ) In subsection (1)(a), after "undertaker" there is inserted "or licensed water supplier".
	( ) In subsection (2), for the words from "consent" to the end there is substituted "appropriate consent".
	( ) After that subsection there is inserted—
	"(3) In subsection (2) above, the "appropriate consent" means—
	(a) if the meter is used by one relevant undertaker, the consent of that undertaker;
	(b) if the meter is used by one licensed water supplier, the consent of that supplier;
	(c) if the meter is used by two or more of the following persons—
	(i) a relevant undertaker;
	(ii) a licensed water supplier,
	the consent of each of those persons.
	(4) In subsection (3) above, references to the consent of a relevant undertaker are references to consent under section 176 below."" Page 203, line 11, at end insert—
	"( ) In that subsection, in paragraph (c), for "203(1) or (2)" there is substituted "203(1), (1A), (2) or (2A)"." Page 205, line 38, at end insert—
	"( ) The WRA is amended as follows.
	( ) In section 203 (exchange of information with respect to pollution incidents etc)—
	(a) after subsection (1) there is inserted—
	"(1A) It shall be the duty of the Agency to provide a licensed water supplier with all such information to which this section applies as is in the possession of the Agency and is reasonably requested by the supplier for purposes connected with the carrying on of activities under its licence.";
	(b) after subsection (2) there is inserted—
	"(2A) It shall be the duty of every licensed water supplier to provide the Agency with all such information to which this section applies as is in the possession of the supplier and is reasonably requested by the Agency for purposes connected with the carrying out of any of its functions.";
	(c) for subsection (3) there is substituted—
	"(3) Information provided to a water undertaker, to a licensed water supplier or to the Agency under subsection (1), (1A), (2) or (2A) above shall be provided in such form and in such manner and at such times as the undertaker, the supplier or the Agency, as the case may be, may reasonably require.";
	(d) in subsection (4)—
	(i) for "subsection (1) or (2)" there is inserted "subsection (1), (1A), (2) or (2A)"; and
	(ii) after "undertaker" there is inserted ", to a licensed water supplier";
	(e) in subsection (5), for "a water undertaker under subsection (2) above shall" there is substituted—
	"(a) a water undertaker under subsection (2) above; or
	(b) a licensed water supplier under subsection (2A) above,
	shall"; and.
	(f) after subsection (7) there is inserted—
	"(8) Any reference in this section to a licensed water supplier is a reference to a company holding a licence under Chapter 1A of Part 2 of the Water Industry Act 1991."
	( ) In section 204 (restriction on disclosure of information)—
	(a) in paragraph (b) of subsection (2), for "or sewerage undertaker" there is substituted ", sewerage undertaker or company holding a licence under Chapter 1A of Part 2 of the Water Industry Act 1991";
	(b) in paragraph (c) of that subsection, for "203(1) or (2)" there is substituted "203(1), (1A), (2) or (2A)"; and
	(c) in subsection (4)(a), after "sewerage undertaker" there is inserted ", or with the carrying on by a company holding a licence under Chapter 1A of Part 2 of the Water Industry Act 1991 of activities under its licence,"." Page 206, leave out lines 14 and 15 and insert—
	""(aa) a qualifying licensed water supplier within the meaning of subsection (6) of section 23 of the Water Industry Act 1991 (meaning and effect of special administration order),""
	On Question, amendments agreed to.
	Clause 59 [Water resources management plans]:

Baroness Farrington of Ribbleton: moved Amendment No. 153:
	Page 74, line 32, leave out "and"

Baroness Farrington of Ribbleton: My Lords, in moving Amendment No. 153, I shall also speak to Amendments Nos. 154, 161, 162, 164, 166, 173, 174, 177, 181, 182, 184 and 186. Amendments Nos. 153 and 154 respond to Amendment No. 171AA moved by the noble Lord, Lord Dixon-Smith, in Grand Committee, where he sought to ensure that water companies consult planning authorities for the purposes of preparing their water resources management plans.
	The amendments give the Secretary of State the power to prescribe the parties to whom an undertaker must send a copy of its draft water resources management plan. We will ensure that these regulations specify the planning authorities appropriate to the undertaker's area of supply.
	Amendment No. 161 is identical to Amendment No. 179A moved by the noble Earl, Lord Peel, in Grand Committee. It limits use of the direction-making power for the preparation of flood plans to those reservoirs subject to the 1975 Act's safety regime.
	Amendment No. 162 in Clause 73 enables the Secretary of State to serve a notice on reservoir undertakers requiring them not to publish flood plans or to publish them only as specified. This power would be exercised only if the national security climate required it. The amendment makes clear that the provision applies to all reservoirs and not just the large raised reservoirs.
	Amendment No. 164 provides the sanction for the requirement that relevant water mains and service pipes must be vested in a water undertaker if they are to be connected to the public water supply system. We consider that there needs to be a sanction to ensure undertakers comply with the requirement. The most appropriate way of doing this is to make the provision enforceable by the authority under Section 18 of the Water Industry Act 1991.
	The remaining amendments are technical, tidy words, avoid ambiguity and deal with consequential issues. If the House wishes, I could go through them in detail. If not, I beg to move.

Lord Dixon-Smith: My Lords, I have no wish to debate the amendments. I want merely to express my gratitude to the Government and to the Minister for her explanation, particularly with regard to consultation and planning. I also thank my noble friend Lord Peel for his suggestion as regards reservoirs. We are grateful that the Government have made these amendments.

On Question, amendment agreed to.

Baroness Farrington of Ribbleton: moved Amendment No. 154:
	Page 74, line 39, at end insert "; and
	(c) send a copy of the published draft plan and accompanying statement to such persons (if any) as may be prescribed."
	On Question, amendment agreed to.

Baroness Miller of Chilthorne Domer: moved Amendment No. 155:
	After Clause 59, insert the following new clause—
	:TITLE3:"Water conservation
	WATER CONSERVATION DUTY FOR ALL PUBLIC BODIES
	It is the duty of—
	(a) any Minister of the Crown (within the meaning of the Ministers of the Crown Act 1975 (c. 26));
	(b) any government department;
	(c) the National Assembly for Wales;
	(d) a person holding office—
	(i) under the Crown;
	(ii) created or continued in existence by a public general Act of Parliament; or
	(iii) the remuneration in respect of which is paid out of money provided by Parliament;
	(e) a statutory undertaker (meaning the persons referred to in section 262(1), (3) and (6) of the Town and Country Planning Act 1990 (c. 8)); and
	(f) any other public body of any description;
	in carrying out his or its functions, to have regard, so far as is consistent with the proper exercise of those functions, to the purpose of furthering the conservation of water."

Baroness Miller of Chilthorne Domer: My Lords, in the Bill, with agreement from all sides of the House, we have laid a duty on the Environment Agency to ensure that all water abstracters and users of water do so efficiently. However, we have not yet made an amendment to ensure that all government departments, Ministers, persons holding office under the Crown and any other public bodies do so. The amendment seeks to ensure that they have proper regard for the purposes of furthering water conservation. I do not believe it is reasonable that we should expect everyone else to be efficient in their use of water and not to expect that the Government will be at the heart of such conservation.
	The amendment was tabled in Committee particularly with the Office of the Deputy Prime Minister and the planning authorities in mind. I thought I had heard an encouraging response from the Government that they would consider bringing forward an amendment along these lines. I would have thought that such an amendment was in line with what Defra is supposed to do in promoting sustainability across all government departments. The inclusion of such an amendment would help it to do so.
	I look forward to hearing whether the Government are regarding the amendment with favour. I beg to move.

Baroness Byford: My Lords, although our names are not added to the amendment, we have debated water conservation from the day we started debating the Bill at Second Reading. It gives me great pleasure to support it. If for any reason the Government find the amendment unacceptable because it is not technically correct, I hope that they will confirm that they will take the issue on board and return with their own amendment. I, too, had expected to see a government amendment. Perhaps it is taking a long time to find the right wording or perhaps the Government were close to accepting the noble Baroness's wording.
	I support the thrust behind the amendment. Water conservation for individuals, public bodies and businesses is most important and I hope that the Government will look sympathetically on it.

Lord Whitty: My Lords, in Committee I indicated that I would give further, positive consideration to the substance of this amendment. I regret that this has wide implications for the public sector as a whole and will involve some internal discussions. Those considerations are still under way, so I am not this evening in a position to bring forward an amendment. However, if I can, and if the noble Baroness can give me a little more time, I will do so at Third Reading. If not, I have no doubt that we will return to it if the noble Baroness should wish to pursue it. I cannot now agree the amendment.

Baroness Byford: My Lords, before the noble Lord sits down, he did not answer my question. Is the wording unacceptable, or where do the wrinkles of the amendment lie? It would help us at Report stage—as there is only Third Reading to come—to be given some indication as to where the difficulties may lie.

Lord Whitty: My Lords, I am sorry to disappoint the noble Baroness. It is not an issue of precise wording, but of whether the Government as a whole can accept the wording. I cannot indicate the Government's position tonight.

Baroness Miller of Chilthorne Domer: My Lords, I am disappointed not to have some more positive news from the Minister at this stage.
	It would be absolutely appalling if, in a Bill in which we have laid duties on the private sector and on individuals, the Government were not able to accept a similar duty. I can imagine where the wrinkles lie and where the difficulties are, but some departments may not want to accept this. I accept that in planning terms, it will be difficult. However, given that the Government have admitted that the pressure on water is extreme—in fact, that is one of the reasons for the legislation—they should be most keen to consider it.
	The Minister is right; I shall return to the point at Third Reading with all force if the Government do not bring something forward then. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness O'Cathain: moved Amendment No. 156:
	After Clause 59, insert the following new clause—
	"RESTRICTION ON UNDERTAKERS' POWER TO REQUIRE FIXING OF CHARGES BY REFERENCE TO VOLUME In section 144B of the WIA, in subsection (1)(c) after "prescribed" there shall be inserted "by the Secretary of State, on application by a water undertaker or the Environment Agency,".".

Baroness O'Cathain: My Lords, the amendment deals with metering. We have heard the same old song many times in the course of the Bill.
	The amendment would enable the Environment Agency as well as the water companies to apply to the Secretary of State for an area to be designated as an area of water scarcity. The Environment Agency accepts that real water savings from metering will come only when there is sufficient metering penetration to introduce innovative tariffs that dissuade high domestic use. The agency also recognises that large areas of the South East have unsustainable abstraction regimes. Therefore, we propose to give the agency a formal status in the process of making scarcity designations.
	The Government have identified the,
	"prudent use of water resources and keeping its use within the limits of its replenishment",
	as a priority for water policy. They plan to achieve the sustainable management of water resources through a,
	"twin track approach of demand management and development of resources".
	These sentences are taken directly from Defra's Directing the Flow—Priorities for future water policy, which was published in November 2002.
	However, the Government will permit the growth of metering only on a voluntary basis. Under current legislation—the Water Industry Act 1999—those occupying their homes on an unmetered basis may choose whether to be metered, and water companies may install meters in new buildings. The current situation in which free-meter options are offered is ineffective as a demand-management tool. Further, compulsory metering is more economical than optional or selective metering. Optional metering is more costly as meters may be situated in only every third or tenth house. In other words, compulsory metering is the only economic way of applying demand management in a scarce water area.
	Water companies can carry out compulsory metering only when the area concerned is designated as an area of water scarcity under the Water Industry (Prescribed Conditions) Regulations 1999. Only the Government—namely, the Secretary of State—can designate an area as an area of water scarcity following an application from a water company. But the areas of the South East that have unsustainable abstraction regimes are not recognised as water scarce.
	On 10th April in Grand Committee we tabled an amendment to empower the Environment Agency, instead of water companies, to make an application to the Secretary of State. In reply the Minister argued that water companies should be kept as the applicants as they have the detailed knowledge about water resources in their area, and, secondly, there is nothing at the moment to prevent the agency from proposing changes to the prescribed conditions; indeed, the Secretary of State must consult it on each application.
	The Minister also said:
	"Although the Environment Agency obviously has responsibilities for the totality of supply and can suggest to the Secretary of State that a scarcity designation be introduced, it is not sensible to limit the initiation of that to only the Environment Agency . . . If the amendment suggested that the Environment Agency should be put on the same footing as water companies, I would at least understand that".—[Official Report, 10/4/03; col. GC 112-113.]
	The amendment seeks to address those points by giving the agency and the water companies equal status as applicants. I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, I can see the sense in addressing the issue of metering, particularly in water-scarce areas. Perhaps in reply the Minister can address the fact that the water framework directive will encourage a change in water charging by moving from fixed charges to charges by volume. I believe that it points in that direction.
	I believe that metering on a wider basis would be a more efficient way forward than just in water-scarce areas. However, those areas need to be addressed first, particularly in that regard. The noble Baroness referred to innovative powers. On moving from one system of charging to another, I regret that she did not support my amendment on water affordability because with such large shifts, which I believe will be necessary and which will come about, we need a safety net to protect the more vulnerable. That said, I see the need to consider this amendment.

Lord Livsey of Talgarth: My Lords, the noble Baroness, Lady O'Cathain, is right to draw attention to areas of water scarcity. A point I made in Committee is that in some parts of the country the infrastructure is very lengthy and difficult to maintain but there is plenty of water. In such areas it may not be appropriate to impose a metering regime. As I understand it, the noble Baroness, Lady O'Cathain, is specifically addressing the problem of areas of water shortage.

Baroness Byford: My Lords, I support the ideas behind this sensible amendment. The noble Lord, Lord Livsey, is right to say that there are areas in the country that have a water surplus. We have to ask whether metering is really necessary is such areas. But there are other parts of the country—East Anglia, Kent and the south—where there will also be increased building and increased demand. While the amendment does not require it all to be metered, it directs that metering should be considered seriously in those areas. I am sympathetic to that.
	Whether we live in an area with plenty of water or an area that is short of water, it is still a precious commodity. We have talked about that throughout the Bill. While I accept that it is sensible to look in the first instance at areas where there are shortages of water, it may be that in the longer term we must think again.
	In addition, we are going through some extraordinary cycles of climate change. We do not know where they will end. While it is suggested that new buildings should be metered, my noble friend will confirm that it is not compulsory. It is strongly encouraged. As it is not compulsory, it seems sensible to highlight the difficulty in areas where there is a water shortage. I shall be interested to hear what the Minister says in response to the amendment.

Lord Whitty: My Lords, I correct the noble Baroness, Lady Miller. The water framework directive does not require metering; it requires policies to have regard to recovering costs, which our system can do. Water framework or not, there are already powers relating to compulsory metering in areas of water scarcity. We do not need new, prescribed powers in those areas.
	The present powers allow a water company to apply for water scarcity area status. The Secretary of State decides on the basis of that application, after consulting the Environment Agency, Ofwat, and so on, including the people who would be affected. We already have those powers. Despite the concerns about water scarcity, no water company has applied for those powers to be exerted.
	The amendment adds the Environment Agency and the water companies together but then prescribes the Secretary of State to act only on their representations. Clearly, the Environment Agency can make representations to the Secretary of State and the water companies have a formal ability so to do. However, it is for the Secretary of State to judge whether the designation of an area of water scarcity—and therefore an area of compulsory metering—should be imposed. The amendment, while in a sense giving a stronger status to the Environment Agency, precludes the Secretary of State making the decision herself that there is an area of water scarcity.
	I said earlier that no water company has yet applied for water scarcity area status, presumably on the basis that it might alienate its customers. One could conceive of a situation where it would be necessary for the Government to take the initiative, which the amendment would not allow the Secretary of State to do. While I understand some of the arguments behind the amendment—although I do not completely go along with the line that the noble Baroness takes on metering in general—I understand that in such situations we need to be able to act. In such situations the amendment constrains the ability to act in certain circumstances. It is not therefore appropriate.

Baroness O'Cathain: My Lords, before the noble Lord sits down, how does it constrain the ability of the Secretary of State to act? The Secretary of State currently has the power to act. The problem is that we are trying to get the Environment Agency on side. After all, the responsibility of the Environment Agency is to look after the environment and to ensure that the water resources situation is good for sustainability. One of the reasons for metering is to limit the consumption of water in areas of great water shortage.

Lord Whitty: My Lords, the Environment Agency is perfectly able to approach the Secretary of State to suggest that she uses her powers. She must react to an approach from the water company, but she can make a judgment on it, and she would also be able to act independently of that.
	The amendment would prescribe that the Secretary of State may designate those conditions only after an application from either a water company or the Environment Agency. A crisis situation could be identified which neither wished to suggest. Therefore, it is a constraining amendment, whether or not it was intended to be. I accept the importance of the Environment Agency being given the right. But the amendment as drafted is restrictive.

Baroness O'Cathain: My Lords, I am very grateful to the Minister, as that is one aspect that I had not thought about. I shall go through the amendment with a fine-tooth comb to see whether we can improve the wording.
	The Minister also made the point about customer reactions to compulsory metering, which I am sure is absolutely right. Nobody wants to be the first person to do the nasty thing; in other words, to make metering compulsory. However, if there is a serious shortage of water resources in an area, there is no alternative to longer-term metering; for example, in certain places in the South East the huge water resource problems will be compounded by an increase in house-building in the area. I shall take the matter away and return at a later stage. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness O'Cathain: moved Amendment No. 157:
	After Clause 61, insert the following new clause—
	"WATER RESOURCE MANAGEMENT PLANS AND DROUGHT PLANS: IMPLEMENTATION
	After section 39A of the WIA there is inserted—
	"39D WATER RESOURCE MANAGEMENT PLANS AND DROUGHT PLANS: IMPLEMENTATION
	In carrying out their respective functions, the Environment Agency and the Authority shall—
	(a) take into account the requirements of—
	(i) all water resource management plans prepared in accordance with sections 37A and 37D above, and
	(ii) all drought plans prepared in accordance with sections 39B and 39C above; and
	(b) in that regard co-ordinate the exercise of their respective functions.""

Baroness O'Cathain: My Lords, the amendment would require the Environment Agency and the water regulator to take into account the requirements of all water resource management plans and all drought plans prepared pursuant to the Bill. That can be seen as advancing the cause of joined-up regulation, particularly in respect of water resources management.
	The Government see water resource management plans and drought management plans as major elements of their strategy to manage water supplies and therefore ensure,
	"the prudent management of water resources".
	Again, I quote from Directing the Flow.
	The plans fit into the regulatory regime in two important ways. First, water companies will prepare the plans. Ofwat expects them to take into account the long-running marginal costs. That information will be incorporated into the Environment Agency's updated water resource planning guidelines. Secondly, the Secretary of State will approve the plans.
	The amendment ensures that the plans are carried forward into all aspects of the regulator's work. More generally, the Government are already working to achieve a closer integration between economic and environmental regulation; for example, they want the principles of sustainability to inform the work of the economic regulator. The Water Bill includes a specific duty on the regulator to take into account sustainable development. Also, the Government expect the regulators to work together on specific matters; for example, the implementation of the Water Framework Directive and tackling diffuse pollution.
	The amendment is a practical step to ensure that environmental considerations, including the prudent management of water resources, inform the work of the new water services regulation authority and are of appropriate importance in that of the Environment Agency.
	The amendment was not moved in Grand Committee. On 8th April, in reply to an amendment after Clause 39, the Minister said that he supported more co-ordination but would not favour doing it in such a way as to increase the Secretary of State's powers to override the regulator or undermine its independence.
	This amendment enables more joined-up regulation without giving greater powers to the Secretary of State to intervene in the regulator's decisions. I beg to move.

Baroness Byford: My Lords, I support my noble friend's amendment, which I hope the Government will be able to accept. Even if they cannot accept the current wording, I hope that they recognise the desire behind the amendment and what we hope to achieve. We all agree that we want prudent management. We have also talked about conservation and many other matters today. Joined-up government is essential.
	If we are to have sustainable development in the future, we need to look at all aspects of water resource and water resource plans, particularly with regard to drought conditions that could occur. In the past, we have been quite lucky and there have been very few years when we have been so troubled. But that does not necessarily mean that in future years we will not be so troubled. I hope that the Minister will look at this amendment sympathetically. My noble friend has brought an important amendment before us today. I have pleasure in supporting it.

Lord Whitty: My Lords, there are two issues with this amendment. Turning first to the issue of the drought and water resource management plans, it is important that water companies develop such plans but it is also important to recognise that those plans do not themselves have a statutory basis. As circumstances change, companies will undoubtedly adjust and modify their plans.
	The problem with Amendment No. 157 is that it would have the effect of making Ofwat and the Environment Agency enforce plans which may be out of date and on which a company may have changed its mind. It is primarily for water companies to act on their plans and adjust them in the light of changing circumstances. The regulators must take a considered view based on the general management approach and the circumstances that prevail at the time of any change, taking into account their statutory duties.
	The second effect of the amendment would be to ask Ofwat and the Environment Agency to co-ordinate their functions in respect of drought plans and water resource management plans. While joined-up government is highly desirable, the comments I made earlier on the rather blanket requirement on co-ordination also apply here. The two regulators have different functions and to co-ordinate every decision, particularly in this area, could lead to confusion as to their respective roles.
	While the Government expect the regulators to work together, they have separate duties in this respect. Water regulators need to co-ordinate their activities, and in respect of the earlier more general amendment we said that we would look at ways of setting this out on a less issue-by-issue basis. But this is a matter where, because the respective roles can differ, prescribed co-ordination is difficult to write into this clause.
	Clearly, there are other forms of co-ordination. The regulators are jointly committed to the code of practice, and so forth. As I indicated earlier, we recognise the need for greater co-operation between the various regulators, but I do not think that this form of words would be helpful in clarifying the legal duties of the regulators in this particular clause.

Baroness O'Cathain: My Lords, before the Minister sits down, he said that he wants to have joined-up government but on the other hand the regulators have different duties. But the Water Bill should bring all the regulators and all the agencies together. Is the Minister suggesting that there should be a water Bill for drinking water; a water Bill for sustainability of the environment; or a water Bill for anything else? It just does not make sense. I cannot understand the reaction to this amendment. The Minister could have said, "Look, it is flawed because it is written in the wrong way". Surely, the amendment makes plain common sense. I am very upset about it and I need to test the opinion of the House.

On Question, Whether the said amendment (No. 157) shall be agreed to?
	Their Lordships divided: Contents, 29; Not-Contents, 34.

Resolved in the negative, and amendment disagreed to accordingly.

Lord Evans of Temple Guiting: moved Amendment No. 157A:
	After Clause 63, insert the following new clause—
	"MEMBERSHIP OF REGIONAL FLOOD DEFENCE COMMITTEES IN WALES
	After section 16 of the Environment Act 1995 (c. 25) there is inserted—
	"16A POWER TO ALTER COMPOSITION OF REGIONAL FLOOD DEFENCE COMMITTEES IN WALES
	(1) This section applies in relation to any regional flood defence committee which satisfies (or, upon the coming into force of an order made under Schedule 4 to this Act, will satisfy) both of the conditions in subsection (2) below (a "Welsh committee").
	(2) The conditions are—
	(a) the whole or the greater part of the committee's area is in Wales; and
	(b) no local flood defence scheme is in force in relation to the area of the committee.
	(3) The National Assembly for Wales may by order made by statutory instrument make provision determining—
	(a) the total number of members of a Welsh committee; and
	(b) the method of selection and appointment of the chairman and other members of the committee (including who is to appoint them).
	(4) An order under subsection (3) may—
	(a) apply either to Welsh committees generally or to a particular Welsh committee;
	(b) include such supplemental, consequential and transitional provision as the National Assembly for Wales considers appropriate.
	(5) In relation to a Welsh committee whose area is not wholly in Wales—
	(a) the power to make an order under subsection (3) above may be exercised only with the agreement of the Secretary of State; and
	(b) a statutory instrument containing an order under that subsection shall be subject to annulment in pursuance of a resolution of either House of Parliament.
	(6) An order under subsection (3) above shall not be considered local in nature for the purposes of section 58(6) of the Government of Wales Act 1998 (definition of "Assembly general subordinate legislation").
	(7) Section 15 above (or, where the order is being made in conjunction with an order under Schedule 4 to this Act, that Schedule) shall not apply for the purposes of making an order under subsection (3) above.
	16B Effect of order under section 16A
	(1) Sections 15 and 16 above and section 18A(3) below shall not apply to a regional flood defence committee in respect of which an order under section 16A above is in force.
	(2) In relation to any such committee, section 18 below shall have effect as if—
	(a) paragraph (b) of subsection (4) read "other members appointed in accordance with and subject to the terms of the local flood defence scheme"; and
	(b) paragraph (c) of subsection (4), and subsection (5), were omitted.
	(3) In relation to any such committee whose membership does not include any member appointed by or on behalf of a constituent council, Schedule 5 to this Act shall have effect as if—
	(a) in paragraph 1(1), the words "other than those appointed by or on behalf of one or more constituent councils" were omitted;
	(b) sub-paragraphs (2), (3) and (4) of paragraph 1 were omitted; and
	(c) paragraphs 2 and 9 were omitted.""

Lord Evans of Temple Guiting: My Lords, the amendments will provide the National Assembly for Wales with the power by order to reform the composition of regional flood defence committees in Wales. The present composition is established by primary legislation. In Wales committees comprise local authority, Environment Agency and Assembly appointees with the local authorities providing the majority.
	Flood defence functions in Wales are devolved to the National Assembly, which is the democratically accountable body for Wales. The Bill separately provides powers which will enhance the Assembly's ability to make changes to the structure of flood defence committees and their funding arrangements. It is logical that in considering this the Assembly should be able to determine the membership of its committee(s) which have a key role in delivering flood defence for the people of Wales.
	Making the power available to the Assembly does not prejudge how that power will be exercised. If, however, the Assembly decided to exercise this power, any proposed change would be subject to the Assembly's scrutiny and approval procedures.
	As current committee boundaries follow river catchment rather than political boundaries, there are parts of England which are served by Welsh committees and vice versa. To safeguard the interests of those living in England and being served by Welsh committees the amendment includes the requirement for the Secretary of State's agreement to changes proposed by the Assembly which impact on England.
	Clause 92 is consequential on the introduction of Sections 16A and 16B. I beg to move.

Lord Livsey of Talgarth: My Lords, I am happy to make a short input into the amendment as a Welsh Member of this House. It is very welcome indeed to see that the Assembly will be able to exercise these powers. I wish to put one or two points on the record regarding membership of regional flood defence committees in Wales. I am pleased that the amendment refers to committees to be specified by the Assembly, and that the Assembly will have the power to alter the composition of the regional flood defence committees in Wales. That is a satisfactory state of affairs.
	The method of selection of the committees is the purview of the National Assembly. I wish to make two points which are encapsulated in the present system. Obviously, there is the question of technical expertise and local input. At the present time some of the technical expertise is supplied by the Environment Agency and the local input by local authorities. I am sure that the Assembly will take note of what I have just said and will undoubtedly also take note of what the Minister said about cross-border influences and the solutions to that. I merely point out that we have in Wales at least two river systems, the Wye and the Severn, which cross the England/Wales border. It is obviously important that that aspect is addressed by the Assembly.
	Should the Government accept what is contained in the next amendment—I do not want to pre-empt it in any way—that might have an impact on what the Assembly might wish to do on the question of river basin management. I hope that the Assembly will take note of this debate and the points made in it and in particular the merits of some of the aspects of the Bill to help it come to decisions on how to manage the system. I realise that I am on delicate ground as this is the purview of the Assembly and not of this House. Nevertheless I make these points as a Welsh Member of this House.

Lord Dixon-Smith: My Lords, I am very pleased to follow the noble Lord, Lord Livsey, in responding to the amendment. In doing so, I hope that he will forgive a gentle reminder, prompted by his opening remarks, that he is a Member of this House. He may come from a part of the country that is rather special, but we all come from parts of the country that are rather special, and we none of us represent them.
	I am very grateful to the Minister for his letter of explanation, if only because it gave me the opportunity to consult colleagues who knew rather more about the special area that the amendment affects than I do. We have members there, and the Minister will be glad to know that he is acting in complete compliance with their wishes. I am sure that that will give him great reassurance.
	The amendments are easy to support, because they are directed at giving control of the local situation with regard to rivers and so on to those who know most about them—the people immediately affected. I have only one comment: what is sauce for the goose is sauce for the gander. The amendment applies to Wales, but others might apply to England. If we are to apply a consistent principle throughout the Bill, proposing something for one area makes it entirely relevant for consideration elsewhere. I am happy to support the amendment.

Lord Evans of Temple Guiting: My Lords, I want to tell the noble Lord, Lord Dixon-Smith, that I know exactly where I come from. I do not come from Wales; I come from Cambridge in England. However, I am here as spokesman in the House of Lords for matters relating to Wales. I am extraordinarily sensitive, as we all have to be, to the fact that we are talking about a devolved matter. It is absolutely appropriate for noble Lords to comment on matters, but we must remind ourselves that those matters have to be considered by the Welsh Assembly. For that reason, I am extremely grateful to the noble Lord, Lord Livsey, for putting on record for consideration by Members of the Welsh Assembly a number of matters in which he was interested and wished to draw to their attention.

On Question, amendment agreed to.
	Clause 64 [Regional flood defence committees]:

Baroness Miller of Chilthorne Domer: moved Amendment No. 158:
	Page 81, line 25, at end insert—
	"(5) Subsections (1) to (4) above shall have effect until December 2007.
	(6) On 1st December 2007 section 14 (regional flood defence committees) of the Environment Act 1995 shall be repealed.
	(7) From 1st December 2007 the Secretary of State shall, by order, establish a river basin management committee in place of each regional flood defence committee which will cease to exist under subsection (5).
	(8) The timescale for the establishment of river basin management committees under subsection (7) shall be in accordance with Article 14 of the Water Framework Directive.
	(9) Each river basin management committee shall include—
	(a) elected local authority members from the local authorities which are located in part or entirely within the river basin covered by the committee; and
	(b) other members whom the Secretary of State considers to offer substantial local knowledge on issues within the competence of the committee.
	(10) Each river basin management committee shall inherit all of the powers and duties of the regional flood defence committee it shall replace.
	(11) Each river basin management committee shall develop policies and a river basin management plan in consultation with the Environment Agency.
	(12) Each river basin management committee may, where the size of the river basin so necessitates, and after consulting the Secretary of State, establish such sub-basin management committees as it considers appropriate.
	(13) From 1st December 2007 the amendments made in subsections (2) to (4) to Schedule 4 to the Environment Act 1995 shall have effect as if references to "regional flood defence committee" or any variant thereof were to "river basin management committee" or the appropriate variant."

Baroness Miller of Chilthorne Domer: My Lords, the clause aims to rearrange the flood defence committees. Before I go any further I had better declare an interest, in that my husband chairs one such committee. The rearrangement of the committees may well be an improvement, but it ignores completely a whole range of issues that the Water Framework Directive—we have been reminded that it will move into national implementation at the end of the year—will require. It is a great loss that Clause 64, instead of grasping that opportunity and creating river basin management committees, simply rearranges flood defence committees.
	My amendment does not propose adding another layer of committee. It proposes that we abolish flood defence committees, not immediately but in 2007; I recognise that it may well take that long for the Government to come up with the geographical areas, composition of the committees and exactly how they will operate. By 2007, we need committees that are able to take on the requirements of the Water Framework Directive.
	I am aware that there is government resistance to this proposal. The Government, having appointed the Environment Agency as the competent agency to oversee all of the river basin management issues, believe that the agency should be in charge of its own plans with its own discretion as to how and when to involve the public.
	The directive makes it clear that public participation must happen. But I do not believe that it is adequate to leave the agency in charge of such an important area and then to say that the flood control element alone can be subject to some kind of democratic accountability.
	I anticipate that the Minister may well say that local plans or regional spatial plans are the place for involvement. But at present those bodies have much else to deal with—housing, waste and transport—and they will never devote sufficient time to water and water issues, particularly at the point when the Water Framework Directive is new and needs an enormous amount of energy in terms of its successful implementation. Perhaps after 15 or 20 years the regional spatial plans might be considered the place to deal with water issues. But I do not believe that any of our democratic structures these days are likely to last for 20 years unchanged.
	The Environment Agency's role as the competent authority is crucial in terms of giving technical advice and producing the plan. But it is primarily an organisation that is geared to regulating. Its primary function is not as a facilitator of public debate and involvement—indeed, that is not where its expertise lies.
	We need a statutory group of people, drawn from the communities of the river basin, to oversee a process which, if successfully implemented, as we have said time and again in this House, will bring great benefits. But if it is unsuccessfully implemented, with inadequate public participation, it could well be disastrous and expensive. To date, the Government's record is not terrific in this area. They have one pilot in the Ribble Valley which was implemented a year or so later than all the rest of the European pilots and after a great deal of debate over whether England would bother with a pilot at all. By contrast, the Scottish Executive already has a national stakeholder forum of representatives of industry, landowners, environmental organisations and the public.
	My amendment allows in subsection (9) for a mix of people, but, crucially, it specifies that there must be representatives of the public, elected by the public themselves, as councillors. The Secretary of State can then supplement those from a range of people with the necessary skills and local knowledge.
	As to timing, I have specified December 2007. I suggest that that would be enough time for the Government to organise this process. It is also driven by the fact that that is the latest date when the river basin management plans can be produced on time yet enable adequate public input. The preparation of the plans must happen at least three years before they are due to be implemented.
	Anyone in this Chamber—I know that there are several—who has been involved in the preparation of a local plan will know that it takes several years to allow for enough public consultation. Given that the Water Framework Directive introduces a new process, I believe that that time-scale is probably just sufficient.
	It has been said that the Water Framework Directive will have as big an impact on the management of water in Europe as Roman aqueducts did at the time. I remind the Government that in Roman times the introduction of aqueducts decided whether new towns could develop. They removed water from some and gave it to others. Perhaps the Labour Government should not be compared to a Roman emperor, but I hope that they will have learnt some lessons from that and will encourage genuine public participation, where the agency is not in charge of the process. I beg to move.

Lord Livsey of Talgarth: My Lords, my name is attached to this amendment. I wish also to mention Amendment No. 159, which is linked to Amendment No. 158. First, I fully support my noble friend Lady Miller in her amendment and wish to be recorded as doing so, particularly with regard to the aspects of the amendment relating to local input, which is absolutely vital in river basin management.
	However, my concern is with Amendment No. 159, which relates to non-main rivers. The amendment states:
	"River basin management committees shall have the power to direct . . . the Environment Agency to carry out non-main river management schemes".
	That is not all. Paragraph (b) states,
	"that adequate funds be provided to the Environment Agency to carry out non-main river management schemes to agreed standards".
	I am happy to say that I received letters from the Minister and the Environment Agency which are extremely helpful in that regard.
	As Members of this House will know, in Committee I pressed particularly hard for non-main rivers to be taken within the purview of the Environment Agency so far as concerns management, flooding and matters of that kind. The Environment Agency responded, saying that the Government are already proposing to transfer responsibility for critical ordinary water courses by reclassifying them as main rivers. I welcome that very much. My only problem is that that apparently does not include all non-main rivers but those classified as critical ordinary water courses.
	To inject a lighter note into this matter, the letter from the Environment Agency says that this subject has the unfortunate acronym of "COWS". I suppose that that is the first instance of cows grazing water! Indeed, main rivers are already designated, and ordinary water courses and all other water courses are the responsibility of local authorities or, where they exist, internal drainage boards. I believe that the Government have gone a long way to ensuring that non-main rivers which cause considerable flooding and problems and which at present are not maintained or managed by the Environment Agency will be so maintained and managed in future.
	I am a little concerned about what will happen to ordinary water courses which are not critical. As I understand it, this matter will still come within the control of local authorities. Global warming is important these days and is becoming increasingly so. Sometimes communities receive a surprise when smaller rivers which they have not seen flood for a long time suddenly do so because of incidents which are not, and in the past have not been, typical but, sadly, sometimes now are, and they cause much damage to property and to land. Therefore, in proposing this amendment, I am taking note of correspondence that I have received from the Minister.

Lord Dixon-Smith: My Lords, I believe that two issues relating to these amendments are worth mentioning. Having dealt with the previous amendment, which sets out particular conditions for Wales, it seems to me that, in a sense, the Government are conceding the principle behind the amendments so far as concerns England. The Minister may choose to deny that in due course, but that remains to be seen.
	However, I believe it has been a consistent argument from our side that those who know most about the local conditions on local rivers and most about where the problems lie are those who have to deal with them. In the past, those organisations have always been the local river board or the local land drainage committee or whatever. In principle at any rate, we would be bound to support the sentiments behind the amendments even if we did not agree with every word in them.
	A slightly different issue arose in correspondence that I saw a while ago from our local environment agency. It appeared to fall back on what I believe is still the technical English common law position; that is, ultimately, the responsibility for any particular water course lies with the riparian owner. A local authority may act—it has the power to act if it feels that that is necessary—but it does not have to. I believe that I am right in saying that the same legal position applies to the Environment Agency: it may act—it has powers to act—but the legal responsibility if things go wrong still lies with the riparian owner. I should be pleased to be reassured that the responsibility of local authorities, local drainage boards or the Environment Agency was more clearly drafted than was implied by that correspondence. Whatever answer I receive, I may have to have more interesting correspondence with my local environment agency.
	I return to the amendment. In principle we believe that it is correct and I am pleased to support it and those grouped with it.

Lord Whitty: My Lords, Amendment No. 158 would abolish regional flood defence committees and replace them with "river basin management committees". The intention appears to be that these new committees would deal not only with flood defence but also the river basin management plans under the water framework directive. It is not mandatory under that directive to create river basin management plans and it does not touch other responsibilities of the flood defence committees.
	The Government yield to no one in this regard; certainly not with regard to the expressions, with which I totally agree, about the importance of local engagements and local representation on the management boards. We have a query with the structure and timescale proposed in the amendment. The Government have recently announced their own conclusions on the review of flood and coastal defence funding and administrative arrangements. That followed pretty widespread consultation. One of the key conclusions is that a single tier of flood defence committees should be established to improve accountability and reduce administration. At present, some parts of the country have two tiers and others have one tier; it is a total hotchpotch. Clause 64 as currently drafted would allow us to create the new structure and I hope that it would do so within a timescale that allowed us to put the new structure in place by 2005. The noble Baroness's amendment puts that back by two years and would require a further round of changes to the structure and loss of the benefits in the intervening years. More importantly, it leaves us with a structure that relates to river basin catchment areas, several of which are larger than the areas that are currently covered by some of the flood defence committees and might prove difficult to operate effectively.
	Respondents to the review emphasised the need for flood defence provisions to be determined by dedicated bodies covering areas that were significantly smaller than the larger river basins.
	Flood defence committees would have a very distinct role to play in delivering the flood defence service. The Environment Agency is required to carry out nearly all of its flood defence responsibilities through those committees. They are, in that sense, executive committees. That is most effectively served by the discharge of their powers and functions through regional flood defence committees that are specifically designed for that purpose and not the wider purposes envisaged by the amendment. If we submerged them in a new committee with a much broader remit we could lose the focus on flood defence issues, which is vital to our flood defences.
	The role of the Environment Agency was also raised. We have already consulted on the proposition that the Environment Agency will be the "competent authority" for the directive rather than local authorities, and that the agency's functions will include co-ordinating the production of river basin management plans. The agency is developing a strategy for ensuring effective engagement with stakeholders, including local authorities and others, but it will be for the agency to decide whether this might include more formal committee-style arrangements to carry forward the development of river basin plans. That is a separate issue from how we structure our flood defences.
	The whole point of any rationalisation of the current flood defence committee structure is to make it more effective, more focused, and less of a hotchpotch across the country. The effect of this amendment would be to broaden the scope and create some large structures that would be incapable of carrying out that focused activity.
	Regarding Amendment No. 159, to which the noble Lord, Lord Livsey spoke, it is true that some classification issues arise, but the distinction between "main rivers" and "non main rivers" needs to be maintained. The main rivers are those on which the Environment Agency's activity is focused, and which provide the highest risk from flood damage. The amendment would suggest that non-main rivers would come under the Environment Agency. I was not sure whether the noble Baroness was referring to the Secretary of State or to my noble friend Lady Young of Old Scone as a Roman emperor—she is not in her place. The idea that all local authorities' functions in relation to non-main rivers should come under the Environment Agency would be met with resistance by the local authorities. In any case, it is not appropriate if the focus of the Environment Agency is on the areas of highest risk.

Lord Livsey of Talgarth: My Lords, I thank the Minister for giving way. Neither the funding nor the equipment is available to local authorities to manage the non-main rivers adequately. As I understand from correspondence, critical waters are now going to be managed by the Environment Agency. Am I correct?

Lord Whitty: My Lords, the Environment Agency allocates its priorities according to the highest risks, and those are on the main rivers. Therefore the funding priorities reflect that. I cannot comment on the exact funding situation of any group of local authorities that have been in correspondence with the noble Lord. But priority for flood defence relates to the main rivers—including one or two that may need to be reclassified.
	The two amendments go against the outcome of the consultation, and the intention to set up flood defence committees that are capable of delivering the job of flood defence and relate to areas that can be truly reflective, both of local representation and of the flood defence threats presented. I therefore hope that the amendments are not pursued.

Baroness Miller of Chilthorne Domer: My Lords, I am almost speechless. Out of politeness, I thank the Minister for his reply, but I am deeply disappointed by it. He continues to miss the point. I agree that the Government did consult on flood defence committees' restructuring, when they should have been consulting on how to involve the public in the Water Framework Directive. When the Minister said that the committees need simply to be flood defence committees, so that they can focus on floodwater issues, that entirely misses where the Water Framework Directive takes us. It takes us away from dealing with floodwater as simply that, and it encourages us to deal with water as a whole, as a cycle—so that while it could be floodwater, it could also be water helping wetlands to be successful or it could be irrigation water. That will involve the public in all sorts of ways, planning authorities and so on.
	I am deeply disappointed that the Government still refuse to see that simply rearranging the flood defence committees will not change fundamentally the attitude to water of the public and public bodies as required for the measure to be successful.
	I can see that I shall get no further in obtaining the Government's consent to the amendment. In order to make the point, I shall test the opinion of the House.

On Question, Whether the said amendment (No. 158) shall be agreed to?
	Their Lordships divided: Contents, 17; Not-Contents, 30.

Resolved in the negative, and amendment disagreed to accordingly.
	[Amendment No. 159 not moved.]

Lord Whitty: moved Amendment No. 160:
	After Clause 67, insert the following new clause—
	"EFFICIENT USE OF WATER RESOURCES
	In section 6 of the Environment Act 1995 (c. 25) (general provisions with respect to water), in subsection (2)(b), after "Wales" there is inserted "(including the efficient use of those resources)"."
	On Question, amendment agreed to.
	[Amendment No. 160A not moved.]
	Clause 69 [Environment Agency to be enforcement authority under the Reservoirs Act 1975]:
	[Amendment No. 160B not moved.]
	Clause 72 [Flood plans]:

Lord Whitty: moved Amendment No. 161:
	Page 85, line 17, after first "a" insert "large raised"
	On Question, amendment agreed to.
	Clause 73 [National security]:

Lord Whitty: moved Amendment No. 162:
	Page 86, line 34, after "reservoir" insert "(whether a large raised reservoir or not, as the case may be)"
	On Question, amendment agreed to.

Lord Livsey of Talgarth: moved Amendment No. 163:
	After Clause 76, insert the following new clause—
	"SUSTAINABLE CONSERVATION OF WATER RESOURCES
	The Environment Agency shall continuously monitor water resources in England and Wales to ensure—
	(a) that all water resources are ecologically sustainable;
	(b) high levels of water quality;
	(c) that water quality consistently improves over time;
	(d) that compensatory river flows can sustain a river system;
	(e) that volumes of water in lakes and reservoirs comply with agreed pre-determined levels;
	(f) that oxygen and acidity levels meet agreed parameters;
	(g) that fresh water fisheries can sustain the renewal of fish populations;
	(h) that actions and targets are laid down as a result of river basin management plans agreed with river basin management committees."

Lord Livsey of Talgarth: My Lords, Amendment No. 163 is the braces for the belt which is the EU Water Framework Directive. If that does not come through in the Bill, this is a longstop to try to ensure that we have proper environmental sustainability. The amendment deals with the sustainable conservation of water courses. We ask for the Environment Agency to monitor continuously water resources in England and Wales to ensure that all water courses are ecologically sustainable; that there are high levels of water quality; that water quality consistently improves over time; that compensatory river flows can sustain a river system; that volumes of water in lakes and reservoirs comply with agreed pre-determined levels; that oxygen and acidity levels meet agreed parameters; that fresh water fisheries can sustain the renewal of fish populations; and that actions and targets are laid down as a result of river basin management plans agreed with river basin management committees.
	That is a longstop if we do not have adequate protection in the Bill. We would like to ensure that the principles of environmental sustainability are contained in this legislation. We believe that the main points are made in the amendment. I beg to move.

Lord Whitty: My Lords, the noble Lord links this amendment to the Water Framework Directive and in some sense it would appear to be another attempt to put chunks of the directive or what one needs to do under the directive on to the face of the Bill. I know that is what the noble Lord thinks and that is what the Liberal Democrat Benches have been urging on us, but the logic of decisions taken during the passage of the Bill is that, for the implementation of the directive, we are resting on the normal transposition process. Therefore, the Bill does not cover the range of areas covered by the Water Framework Directive. While many of the objectives are desirable and reflect other parts of the Bill, it seems superfluous to have in the Bill a clause that will be dealt with by another piece of legislation, albeit secondary legislation, under the European Communities Act. Therefore, I hope that the noble Lord does not pursue the amendment.

Lord Livsey of Talgarth: My Lords, I note what the Minister said, and I also note the late hour. This amendment is essential to ensuring the environmental and sustainable conservation of water resources. However, I do not wish to press this amendment at present. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 85 [Self-lay and adoption of water mains and service pipes]:

Baroness Farrington of Ribbleton: moved Amendment No. 164:
	Page 101, line 6, at end insert—
	"( ) The prohibition imposed on a water undertaker by subsection (11) above shall be enforceable under section 18 above by the Authority."
	On Question, amendment agreed to.
	Clause 86 [Requisition and adoption of sewers]:

Lord Livsey of Talgarth: moved Amendment No. 165:
	Page 105, line 31, at end insert—
	"(5) After consultation with any such bodies as appropriate the Secretary of State shall publish a protocol for unadopted sewers."

Lord Livsey of Talgarth: My Lords, I am sure that the Minister will note that I have considerably modified this amendment, which refers to unadopted sewers. The Minister was helpful in Committee. In the report of the Committee proceedings of 29th April 2003, one can read that the Minister assured the Committee that as far as the new build was concerned, any new sewers would be the subject of a protocol that was established as a result of a consultation in 2000,
	"which sets out the key elements of design and construction of sewers for all new developments".—[Official Report, 29/4/03; col. GC 161.]
	That is what the Minister said when we discussed another, similar amendment. He stated then that,
	"the situation is far more complicated with regard to existing private sewers".—[Official Report, 29/4/03; col. GC 161.]
	At that time, the Minister said that he would shortly issue a consultation paper seeking views on possible solutions to deal with the problems.
	In this amendment, I am not asking for precise commitments from the Minister in the Bill, but I am asking for parity with new developments as far as unadopted sewers are concerned. We are asking for a protocol for unadopted sewers, in the same way as the Minister outlined that there is a protocol for new sewers. This would be a commitment from the Government to ensure that these unadopted sewers would be the subject of a protocol and would be brought up to scratch over time. It gives the Minister more leeway than I gave him in previous amendments in Committee.
	I doubt whether there is any Member in the other place who is not afflicted with the problem of unadopted sewers in his constituency. They are a blight on housing, and a huge problem. If the Minister will accept this and produce a protocol that lays down the conditions for unadopted sewers to be brought into the system in a way of the Government's choosing, many residents throughout the country would be eternally grateful. This is important, and I beg to move the amendment.

Lord Dixon-Smith: My Lords, it is a regrettable fact that unadopted sewers have an awkward parallel with unadopted roads. Sometimes, trying to put the situation right is a moot point. If people have lived with unadopted sewers and unadopted roads, often the problem of getting them into a state in which they can be adopted—which means lifting them to a standard where they are of comparable quality and comparable stamina to existing public roads or sewers—places the householders with considerable financial liabilities.
	It may be a regrettable reality, but if the Secretary of State produces a protocol on the matter—it would not cost the Exchequer exorbitant sums of money—there will be great difficulty and disappointment. The Secretary of State can, and probably should, come up with a protocol. But none of us should begin to assume that the protocol will necessarily provide relief or an immediate solution to those who must live with such problems, if there is a problem.
	The situation will be rectified only when property owners who are affected eventually dip into their pockets and lay out the necessary capital, as has been the case with unadopted roads. If they do so, and must subsequently put their property on the market, they will normally get their money back in enhanced value. But that does not alter the fact that many of them will not want to sell their property; nor will they want to put their hands in their pockets. This is a quite fruitful way of causing divisions in what are often tight-knit communities.
	That said, I agree entirely that, where such problems exist, they should be tackled if possible. However, they can be tackled only with the voluntary agreement and co-operation of those who have enjoyed the benefit of living for so long with an unadopted sewer.

Lord Whitty: My Lords, I recognise some of the points and problems referred to. However, the amendment is slightly misconstrued. The protocol to which the noble Lord, Lord Livsey, and I referred deals with the design, construction and adoption of new sewers and the process of development. In this amendment, for the most part, we are talking about what should be done about existing unadopted sewers. It is doubtful that a protocol for unadopted sewers would be parallel to that which has been produced for new development.
	The next stage of the work is to look at existing private sewers. We will shortly produce a consultation paper engaging with everyone concerned about solutions for dealing with existing private sewers in England and Wales. I am not sure of the outcome of the consultation. However, it will not be the same sort of protocol to which I referred in Committee. Therefore, it is premature, and probably inappropriate, to stipulate a protocol in this part of the Bill. I must therefore resist the noble Lord's amendment.

Lord Livsey of Talgarth: My Lords, I thank the noble Lord, Lord Dixon-Smith, for his support of the amendment. I note what the Minister says; however, as he said previously, there will be a consultation paper on unadopted private sewers. I am sure that we will all be anxious to know the outcome of that consultation. It is not asking much of the Minister in these circumstances to produce a protocol and to give a commitment that it will incorporate the findings of the consultation paper. The amendment was deliberately loosely framed, but we seek a commitment.
	In the circumstances, it may be necessary to return to the matter on Third Reading. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 88 [Requisition of lateral drains]:

Lord Whitty: moved Amendment No. 166:
	Page 108, line 43, leave out subsection (8) and insert—
	"(8) The substitution by subsection (7) of section 101 of the WIA does not apply in respect of requirements notified under section 98 of the WIA before subsection (7) comes into force."
	On Question, amendment agreed to.
	Clause 91 [Communication with public sewers]:

Baroness O'Cathain: moved Amendment No. 167:
	Page 113, line 42, at end insert—
	"(2A) For paragraph (b) of subsection (2) there is substituted—
	"(b) to discharge directly or indirectly—
	(i) foul water into a sewer provided for surface water; or
	(ii) except with the approval of the undertaker, surface water into a sewer provided for foul water; or"."

Baroness O'Cathain: My Lords, in moving Amendment No. 167, I shall speak also to Amendments Nos. 168, 169 and 170. The background to these amendments is that sewerage and drainage systems are designed to cope with existing and planned development. Systems have to be managed to cope with excessive rainfall or demand. However, water companies have no discretion as to where a developer or householder connects to the drainage and sewerage systems. Some developments are designed with sustainable drainage systems such as soakaways. That may mean that there is no surface water sewer. Currently, there is nothing to prevent a householder from connecting his surface water run-off to the public foul sewer. Such overloading of systems can lead to flooding.
	There is a case for allowing water companies to reject or amend developers' plans or householders' requests for connection in cases where it may lead to problems for existing infrastructure and to suggest alternative connection solutions. The amendments will allow sewerage undertakers some discretion as to whether to allow connection of private surface water sewers and drains to public sewers in circumstances where less costly provision for surface water disposal could be made. It will enable sewerage undertakers to develop a sewerage system planned and managed in a sustainable manner, to reduce the risk of flooding from sewers and to ensure consideration of sewerage and ancillary works at an early stage of the development and construction process.
	In Grand Committee, the Minister acknowledged the importance of sewerage and the necessity for developers to take account of the problems that can arise if the developer does not recognise what has happened there already and what will be needed in terms of increased pressure on the system. He said that the Government were in discussion with water companies and the ODPM about sewerage development. He continued, recognising the problems. He responded that sustainable surface water drainage systems are being considered by a working group under the chairmanship of the agency. He suggested:
	"If we can develop such systems, they can significantly reduce pressure on the sewerage system by collecting, treating and disposing of surface water locally into the ground. ... We also need to establish the responsibilities and the costs of building and maintaining such systems".
	The Minister referred to the consultation paper launched on 22nd May.
	He added:
	"Until that work is completed and decisions have been taken on it later in the year, I believe that it would be premature to accept the amendment as it stands and to see whether . . . we should amend Section 106 of the 1991 Act".—[Official Report, 29/4/03; col. GC 163.]
	There is a lot of good reasoning in the Minister's arguments. We understand that the Government will publish its own consultation on SUDs in the autumn, along with a consultation on private sewers—should these be adopted by the industry. We are concerned that there is no guarantee that these amendments, if withdrawn, would feature in a subsequent Bill, which we assume would be the environment Bill.
	Supporting the case against the Minister's arguments, subsection (4A)(a) in Amendment No. 168 states that where,
	"it is feasible for an alternative method of drainage to be provided, utilised, maintained and kept in repair",
	and in (b) that it is,
	"justifiable taking into account the relative cost to the applicant".
	The fallback position for the industry would be to seek assurances that provisions covering the amendments would be incorporated within a subsequent environment Bill. I beg to move.

Lord Livsey of Talgarth: My Lords, we support the amendments, particularly those which relate to foul water. It is a huge problem in some areas and a very serious degradation of the water environment.

Lord Whitty: My Lords, I recognise that and the problems which this group of amendments seek to address. But I repeat what I said in Committee. We have issued the Framework for Sustainable Drainage Systems in England and Wales as a consultation paper which, among other things, focuses on the issues of sewerage, including the problem where foul sewers also carry surface water and the surcharge and discharge that results from that.
	That consultation is quite complex. I am still of the view that we should await that consultation before proposing amendments to the 1991 Act, to which these amendments are directed.
	A further consultation stage may be necessary later this year so that we can consider further all the specific disposal arrangements, including the issue of enforceable ownership and arrangements relating to the connection and maintenance of private sewers. Until we have gone through that process, it is premature to amend Section 106 of the 1991 Act.
	Therefore, while registering similar concerns to the noble Baroness, I would not wish to see the amendment in the Bill. However, as a result of the consultation, it may be that some other piece of legislation may be appropriate to carry forward similar amendments.

Baroness O'Cathain: My Lords, before the Minister sits down, it could also be that after the process of consultation nothing would be done; then what do we do? If this is such a serious matter, we want to ensure that it is somewhere in the Bill.

Lord Whitty: My Lords, at the end of the consultation period we will take decisions in the light of the consultation. It is conceivable that one of the options would be to do nothing. I very much doubt it however; this is too serious a problem for no action to be taken.

Baroness O'Cathain: My Lords, listening to the last sentence or so I feel happier. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 168 to 170 not moved.]

Baroness O'Cathain: moved Amendment No. 171:
	After Clause 91, insert the following new clause—
	"DISPUTES OVER DUTY TO PROVIDE SEWERS
	(1) Section 101A of the WIA (further duty to provide sewers) is amended as follows.
	(2) In subsections (7) to (10), wherever the words "Environment Agency" appear, there is substituted "Secretary of State"."

Baroness O'Cathain: My Lords, the amendment changes the appellant body from the Environment Agency to the Secretary of State. That will remove the inequality of sewerage undertakers having to appeal to the body they were in dispute with. I beg to move.

Lord Whitty: My Lords, when the Environment Act was drafted in 1995 it was considered that the Environment Agency was the appropriate body to consider disputes arising from a sewerage undertaker's decision. It had, and still has, the expertise for dealing with such matters. I know that there are concerns about the pressure on the Environment Agency with the time taken to deal with such disputes; particularly those challenged by undertakers through a judicial review. But were they to revert to the department, as the noble Baroness's amendment suggests, the department would still have to depend for its expertise on the Environment Agency's advice.
	So that would not avoid pressurising the Environment Agency; it would merely lead to a degree of duplication between the department's responsibilities and the expert advice and guidance from the Environment Agency. I am therefore not persuaded that such a change is necessary.

Baroness O'Cathain: My Lords, I heard what the Minister said, but I can imagine a situation where if the Secretary of State had responsibility, he or she would have more clout than the Environment Agency to get things done more quickly than at present. I will probably have to come back to the matter. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness O'Cathain: moved Amendment No. 172:
	After Clause 91, insert the following new clause—
	"LIABILITY OF OWNERS ETC FOR CHARGES IN PRESCRIBED CASES
	(1) In section 144 of the WIA (relating to the liability of occupiers for charges), in subsection (1), after "of this section" there is inserted "and of section 144AA below".
	(2) After section 144 of the WIA there is inserted—
	"144AA LIABILITY OF OWNERS ETC FOR CHARGES IN PRESCRIBED CASES
	(1) In respect of any premises of a class prescribed for the purposes of this section, section 144 above shall take effect as if for the references throughout that section to the occupier or the occupation of premises there were substituted references to the owner or ownership of such premises.
	(2) Regulations made for the purposes of subsection (1) above may also modify or extend the application of that subsection in one or more of the following respects by providing that—
	(a) in relation to any specified types of premises within the class of premises prescribed for the purposes of subsection (1) above, for the references to the owners and ownership of such specified premises, there shall be substituted references to such other categories of persons and to such rights as may be prescribed by the regulations;
	(b) specified classes of persons who are—
	(i) owners of classes of premises prescribed for the purposes of subsection (1) above, or
	(ii) within those categories of persons prescribed for the purposes of subsection (2)(a) above,
	shall be excluded from the application of the regulations;
	(c) the owner or occupier of any premises of a class prescribed for the purposes of subsection (1) above which are provided with any service by a relevant undertaker in the course of carrying out its functions shall, when requested in writing to do so by the undertaker, provide the undertaker with such information as may be prescribed concerning the ownership or occupation of those premises;
	(d) such statutory undertakers or public bodies as may be prescribed shall, when requested in writing to do so by a relevant undertaker, provide the undertaker with such information as may be prescribed concerning the current or former ownership or occupation of any premises of a class prescribed for the purposes of subsection (1) above which are or have been provided with any service by the undertaker in the course of carrying out its functions.""

Baroness O'Cathain: My Lords, the purpose of the amendment is to remedy a deficiency in the water industry legislation. It does not define who is the water industry customer in houses in multiple occupation; for instance, holiday lets, bedsits, lodgings or bed-and-breakfast accommodation. It is important that all water industry customers should be properly defined so that relationships can be established and, in particular, so that customers who receive water and sewerage services can be charged for those services and any debt can be collected.
	The Water Industry Act 1991 gives statutory water and sewerage undertakers—the water companies—the power to levy water and sewerage charges on the occupiers of properties supplied with water or drained directly or indirectly into a public sewer. That is consistent with the statutory duty on water companies to provide water and sewerage services to the occupiers of such premises under Section 144(1).
	The Water Industry Act, with all its amendments, does not define the meaning of the word "occupier". In many cases, that is not a difficulty, but it is a serious problem for houses in multiple occupation. Without a clear definition of "occupier", water and sewage undertakers are having difficulties imposing charges on houses in multiple occupation. Property owners operate such properties as commercial businesses. The existence of a water supply is required to render the property lettable, and in many cases has been provided at the request of the owner.
	Owners argue that they are not responsible for charges and that the water companies should bill the occupiers. However, there is no requirement on them to tell the industry who the occupiers are. Moreover, in many situations the tenants' occupation is far too transient and temporary to enable a water company to levy charges to each multiple occupant. Indeed, water companies would be in breach of privacy if they inquired on a monthly basis about the number of tenants or bedsitters in each lodging for the past month, whether they were single or a couple and therefore what fraction of the bill attributable to the property could be sent to each named individual. That simply does not make sense, but that is the ridiculous situation that directly results from a lack in a definition in law of the term "occupier".
	The water industry has sought legal opinion and has been advised by Queen's Counsel that the definition of the term "occupier" in cases of multiple occupation can be secured only through further legislation. The water industry is in a unique situation in that companies have a statutory duty to supply, whether or not they are paid by their customers. In that respect, their legal situation is similar to that of local authorities, which provide services such as rubbish collection to individual properties and to people living in them, irrespective of whether council tax has been paid.
	The amendment draws on the solution that enables local authorities to levy council tax in cases of multiple occupation. It provides for regulations to define the body of individuals liable to pay water or sewage charges for particular properties by establishing a clear definition of the term "occupier". There is, therefore, an in-built flexibility as to which properties will be affected. The liable individual could be the owner or someone else as determined by regulation. The amendment would also require the owner or occupier of a class of dwellings prescribed by regulations to provide the statutory undertaker with information concerning the ownership and occupation of those dwellings. That would be useful where water companies needed information to ascertain who was the occupier in the case of a particular property.
	Importantly, the amendment would not impose a liability on housing associations and local authorities where the usual single landlord tenant relationship exists. Also, it would not change the direct relationship that exists between any person using tap water who needs to get in touch with his or her local water company on matters to do with the actual water supply.
	There is a good case for changes in primary legislation. The failure of the water industry to recover costs from the people using multiple occupation premises places a significant additional and unfair burden on the customers who are charged and do pay their bills. Domestic customer debt, generally, has been estimated at between £5 and £10 per customer per year. Debts from multiple occupancy dwellings account for a disproportionate share of this burden. We must remember that multiple occupancy of the transient kind is very often practised by upwardly mobile professionals and similar groups who cannot, by any stretch of the imagination, be described as vulnerable or in long-term poverty.
	I have some figures which have been estimated from data provided by three large water companies, Northumbrian Water, Essex and Suffolk Water, and United Utilities. Together, those companies represent 11 million customers out of 52 million served by the industry in England and Wales—more than one in five customers. The figures represent both measured and unmeasured households, in both urban and rural areas, both in the north and the south of the country. We find that, within the industry, approximately 6 per cent of chargeable properties are houses in multiple occupation, but those properties accounted for 13 per cent of household debt written off in 2001–2. That means that those properties account for more than double the debt cost that the water industry incurs for other kinds of property. That is before we look at outstanding debt, not yet written off, which has been steadily growing in the last few years, when sanctions and terminated supply were stopped.
	Water industry debt is a complex problem which needs to be addressed from several perspectives. The figures I have just quoted show that there is a special problem with houses in multiple occupation, which stems from a lack of definition in law for the customer receiving water services and responsible for paying water charges. The deficiency can be remedied only through targeted specific primary legislation. I beg to move.

Baroness Byford: My Lords, I thank my noble friend for bringing forward a very important amendment for us to consider. I shall not go into the detail that my noble friend covered. The amendment asks who is the water industry's customer in houses in multiple occupation. That is a problem that needs addressing.
	My noble friend clearly stated that within the industry approximately 6 per cent of chargeable properties are houses in multiple occupation but that those properties accounted for 13 per cent of debt written off in 2001 and 2002. Those properties account for more than double the debt cost which the water industry incurs from other kinds of property. It is an important issue. I hope that if the Government are not able to accept my noble friend's amendment in its present form, they will recognise publicly the difficulty that afflicts water companies and come up with their own proposals for moving forward on the matter.

Lord Whitty: My Lords, I recognise the difficulties caused by the problem of debt and how it is often related to absconding tenants. But the solution the noble Baroness puts forward is a revolutionary proposal with rather wide ramifications. Effectively it would make landlords responsible for their tenants' debts. So far as I am aware there is no other situation where that is the case. It has ramifications in relation to other suppliers of services such as utilities and other private services. I am not sure that it benefits water conservation. Presumably in metered premises—many HMOs are metered—there is no incentive for the tenant to save water if the landlord always stumps up for the bill. Therefore, I am not sure that the amendment would achieve many of its aims but in any case it raises such wide issues that I do not think that one could introduce such an enticing but radical concept.
	It is not just a simple question of redefining who is the client. The matter goes to the heart of the landlord/tenant relationship in the context we are discussing and in other contexts. I do not accept that we should adopt the measure in respect of water debt. Difficult though that situation is for many water companies, we should try to find another solution.

Baroness Byford: My Lords, before the Minister sits down, I accept the comments he has just made about the difficulty in regard to landlords and tenants. As a landlord I worry about that, but my let property is not a house in multiple occupation. There is a serious problem here that needs addressing. This Bill may not be the right place to do that. However, I support my noble friend's amendment as the matter we are discussing is a growing problem. As we said in earlier debates on the Bill, it is easy for people to walk away from the responsibility of paying their water bills.
	Perhaps the time has come to give additional thought as to how this kind of problem can be overcome. If it is a case of non-payment for gas or electricity, the supply gets cut off and there is no charge for it. But water is still there; the water has to be supplied. Although I fully understand and accept the Minister's logic and I declared an interest as a landlord, there are problems here. I hope that the Government will reconsider the matter. I am not suggesting that they come back with another amendment. The problem is long term and needs to be addressed as it will not go away. Unfortunately, it is on the increase. That is why I support the thrust of what my noble friend is trying to achieve in defining where the buck stops.

Baroness O'Cathain: My Lords, I am very grateful to my noble friend. I am also grateful to the Minister for his comments. He said that the amendment would not benefit water conservation or the environment, but the problem is a drain on the resources of every customer in the land. We all pay more for water because of what are called wanton non-payers—they are not poverty non-payers—who seem to be getting away scot-free.
	We ought to do something to tackle the problem. Other ways have been suggested, and perhaps we should look at them, although it is too late to introduce them to the Bill. We are hoisting the warning cone to say that the situation that has gone on since the sanction to cut off water was taken away cannot go on. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 92 [Devolution: Wales]:

Lord Evans of Temple Guiting: moved Amendment No. 172A:
	Page 116, line 42, at end insert—
	"(g) the function of the Secretary of State under section 16A(5)(a);","
	On Question, amendment agreed to.
	Clause 93 [Minor and consequential amendments and repeals]:

Lord Whitty: moved Amendments Nos. 173 and 174:
	Page 117, line 19, after "enactments" insert "and instrument"
	Page 117, line 19, after "repealed" insert "or revoked"
	On Question, amendments agreed to.
	Schedule 7 [Minor and consequential amendments]:

Baroness O'Cathain: moved Amendment No. 175:
	Page 181, line 48, at end insert—
	"( ) In Schedule 4A—
	(a) for paragraph 1(2)(a) there is substituted—
	"(a) a private dwelling-house constituting the whole or any part of household premises,";
	(b) at the end of paragraph 1 there is added—
	"(3) In this paragraph, "household premises" shall have the same meaning as in section 17C of this Act.""

Baroness O'Cathain: My Lords, the amendment corrects a deficiency in the Water Industry Act 1991 which was introduced through the Water Industry Act 1999. The amendment would make it easier to distinguish between business and domestic customers by extending the clear-cut definition in Schedule 4 to the Bill to other parts of the Water Industry Act where definitional clarity is needed.
	The Water Industry Act 1999 amended the 1991 Act so as to provide two new rights for domestic customers—the right not to be disconnected for non-payment of water charges and the right not to be metered compulsorily in normal circumstances. Both those new rights require that a clear distinction is made between domestic and business customers. Unfortunately, the Act did not clearly distinguish between domestic and business customers in the case of mixed-use properties—for example, where a landlord lives on top of a pub, a janitor lives on industrial premises, or a groundsman resides at a golf club.
	In a letter to Water UK of 11th January 2000, the then Department of the Environment, Transport and the Regions said that, in the case of mixed premises,
	"only the courts can decide definitely what the law means".
	That of course is correct of all legislation, but we should now seize the opportunity to improve the quality of our laws by removing as much uncertainty as possible.
	The uncertainty is damaging not only for water companies, but for customers, who do not know which legal provisions apply to them and whether they are to be considered as business or domestic customers. An example is the owner of a large family home who decides to convert it to a bed-and-breakfast establishment while still living in a small flat at the top. After conversion, the house becomes a mixed-use property. I understand that that happens regularly in the South West. An important financial consideration for such a customer is whether he or she will go on paying the same water charge based on the ancient rateable value of the family house, or whether the property will be compulsorily metered as a business property. That may make a significant difference to the customer's operating costs; therefore the law needs to state clearly what the situation is.
	As the Bill contains a renewed attempt at creating definitional clarity between business and domestic mixed-use premises, in connection with the extension of competition in the water industry, I propose the amendment to extend the improved distinction to other parts of water industry legislation where the distinction is important for industry customers. I beg to move.

Lord Whitty: My Lords, when the Water Industry Act 1999 was passed, there was considerable pressure on this area of the legislation to protect consumers and give a wide definition. I would be reluctant therefore to take on something that would appear to narrow the definition of that protection. Even if we were to consider the redefinition of what was enacted in 1999, the substitution of a definition of "premises" in Schedule 4 would not be appropriate. That use is for the quite different purpose of distinguishing those customers to whom competition will apply, and will be set out in regulations. It would be difficult to frame a definition which tried to achieve different policy purposes.
	To take just one example, the 1999 Act does not protect second homes against disconnection. On the other hand, second homes are still within the definition for the competition regime and that is appropriate. One cannot just transfer that definition into an improved definition in connection with disconnection and other protections for the consumer.
	I am not persuaded that this is a sensible way to go, although I recognise some of the concerns behind the amendment.

Baroness O'Cathain: My Lords, I suppose that I could say, "Thanks, but no thanks". I hear what the noble Lord says. At this hour of the night I shall not get into a great argument with him. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Byford: moved Amendment No. 176:
	Page 184, line 19, at end insert—
	:TITLE3:"Metropolis Water Act 1852 (c. 84)
	Section 1 of the Metropolis Water Act 1852 (restriction on sources of supply of water to London) shall cease to have effect."

Baroness Byford: My Lords, this amendment is linked with Amendment No. 180—which is also linked with Amendment No. 188 tabled by the noble Lord, Lord Whitty. I shall be brief. I have been more fortunate in this amendment than my noble friend, ploughing heavily away on some of hers.
	We raised this issue in Committee. I am grateful that the Minister realised that there was a problem. The Government have reacted to my amendment in bringing forward Amendment No. 188. At this stage, I should like to record my thanks to the Government. I beg to move.

Baroness Farrington of Ribbleton: My Lords, I am very pleased to accept Amendments Nos. 176 and 180. As the noble Baroness, Lady Byford, has noted in her amendment, the restriction on abstraction from the Thames below Teddington Lock is no longer required to protect public health. To this end, Amendment No. 188 has been tabled by the Government as an amendment to the Long Title of the Bill to accommodate this. I commend the amendment to the House.

On Question, amendment agreed to.
	Schedule 9 [Repeals]:

Baroness Farrington of Ribbleton: moved Amendments Nos. 177 to 179:
	Page 206, line 21, column 2, at beginning insert—
	
		
			  "In section 21(9), the words from "in that subsection" to the end." 
		
	
	Page 207, leave out line 9. Page 207, leave out line 13.
	On Question, amendments agreed to.

Baroness Byford: moved Amendment No. 180:
	Page 207, line 26, at end insert—
	
		
			 "Metropolis Water Act 1852(c. 84) Section 1." 
		
	
	On Question, amendment agreed to.

Baroness Farrington of Ribbleton: moved Amendments Nos. 181 and 182:
	Page 208, column 2, leave out lines 32 to 34.
	Page 208, line 46, at end insert—
	
		
			 "National Assembly for Wales (Transfer of Functions) Order 1999 (SI 1999/672) In Schedule 1, in the entry relating to the WIA— (a) in the paragraph relating to functions under sections 2, 5 (etc), the references to section 2, sections 18 to 22, sections 68 to 70, section 93A and section 205,  (b) the paragraph relating to section 28(4)." 
		
	
	On Question, amendments agreed to.
	Clause 94 [Specific transitional and transitory provisions]:

Lord Dixon-Smith: moved Amendment No. 183:
	Page 118, line 7, at end insert—
	"( ) Any person who—
	(a) before the coming into force of any provision of this Act was not required under Chapter 2 of Part 2 of the WRA to have a licence in respect of any abstraction, but
	(b) following the coming into force of this Act does require such a licence in respect of that abstraction,
	shall make an application for the licence within two years of the coming into force of section 7 of this Act, and the licence will be deemed to be granted on the terms of the application until the final and lawful determination of the application."

Lord Dixon-Smith: My Lords, in the absence of the noble Lord, Lord Sutherland of Houndwood, I formally move the amendment. It was considered worthwhile doing this in order to get the Government's reaction. I beg to move.

Baroness Farrington of Ribbleton: My Lords, Amendment No. 183 deals with transitional matters relating to applications that will need to be made for licences, where activities are coming under control for the first time.
	What is being proposed here affects all such activities and sets out in principle what the Government intend to happen anyway. We have stated as much in Taking Water Responsibly. However, legal advice is that such matters are not necessary on the face of the Bill and that the proper place for these is in the transitional regulations that are provided for under Clause 95 of the Bill. I can assure noble Lords that appropriate provisions comparable to this amendment will be incorporated within transitional regulations that will be placed before Parliament in due course.
	Amendment No. 185 seeks to ensure that the mining, quarrying and engineering construction industries will be included in compensation arrangements should a licence not be granted. As I said when this issue was raised in Grand Committee, where any previously exempt activity is unable to continue as a result of the introduction of any new controls by the Bill, Clause 95 already provides that regulations can deal with the payment of compensation.
	We recognise that in some instances existing quarrying operations will require an abstraction licence for dewatering only once the Bill has come into force. We also recognise that under the current clause compensation may not be possible in those circumstances. We are still considering how to address this potential gap and will table a suitable amendment at Third Reading. With those reassurances, I hope that noble Lords will feel that the amendments need not be pressed tonight.
	There is one other related issue to which I must draw attention. In considering the nature of the risks and harm or damage leading to what is to be classed as an "emergency abstraction" by quarries, and so on, we have identified the need to amend the provisions of Clause 7. That, in turn, has led us to consider further the scope of environmental damage in Clause 27. I take this opportunity to inform noble Lords that we shall bring forward amendments to both clauses at Third Reading.

Lord Dixon-Smith: My Lords, on behalf of the noble Lord, Lord Sutherland of Houndwood, I can only say a very heartfelt "thank you".

Lord Livsey of Talgarth: My Lords, I also add my thanks.

Amendment, by leave, withdrawn.
	Clause 95 [Powers to make further supplementary, consequential and transitional provision, etc]:

Baroness Farrington of Ribbleton: moved Amendment No. 184:
	Page 118, line 19, after second "the" insert "Environment"
	On Question, amendment agreed to.
	[Amendment No. 185 not moved.]

Baroness Farrington of Ribbleton: moved Amendment No. 186:
	Page 118, line 32, after second "the" insert "Water Services Regulation"
	On Question, amendment agreed to.

Baroness Byford: moved Amendment No. 187:
	After Clause 96, insert the following new clause—
	"CONSOLIDATION OF WATER-RELATED LEGISLATION
	Within one year of the date that this Act receives Royal Assent, the Secretary of State shall publish a draft Bill for consultation, consolidating the legislation relating to water."

Baroness Byford: My Lords, we return to the issue that we raised in Committee when we stated very clearly that we were all having difficulty in working through the many Acts which have been revised along the way. Therefore, Amendment No. 187 states that, following Royal Assent, the Secretary of State will consolidate the Bill with previous water-related Acts to form a composite body of legislation on water-related topics.
	On 28th May on the "PM" programme on Radio 4, it was reported that Romano Prodi had commented that the draft European constitution document was a wasted opportunity and that it was, in effect, too bland and anodyne. The programme's presenters interviewed Patricia Hewitt. They began by suggesting that those comments justified the Government's refusal to allow a referendum on the subject of the draft constitution. Miss Hewitt's response was that the draft was merely the putting together of four different treaties and that the action was "modernising" and "clarifying". Her whole attitude was that this draft represented some form of common sense and good practice.
	We are led by a Government who utter "education, education, education". Another mantra is the oft-repeated one concerning "joined-up government". When the subject of consolidation of water legislation was discussed in Committee, the Minister was dismissive. He stated at col. GC 179:
	"Indeed, the convention is that the priority for consolidation Acts is determined by the Law Commission rather than by a government department".—[Official Report, 29/4/03; col. GC 179.]
	This is not a government department. This is—or I hope that it will soon be proved to be—the will of the House. Anyone who has tried to follow the responses from the Benches opposite, let alone the wording of the Bill, will be only too aware of the muddle that water legislation is in already. On top of that, as the noble Baroness, Lady Miller said, we will have the Water Framework Directive.
	The water industry is regulated by the following Acts, which are mentioned in Schedule 9 to the Bill: the Reservoirs Act 1975, the Water Act 1989, the Environmental Protection Act 1990, the Water Industry Act 1991, the Water Resources Act 1991, the Competition and Service (Utilities) Act 1992, the Environment Act 1995, the Competition Act 1998 and the Utilities Act 2000. That says nothing of the changes that were made in between. If one then goes through the record of changes that have been made to, for example, the 1991 Water Resources Act, one finds that it is derived from a further set of laws including the Water Act 1989, the Water Resources Acts 1963 and 1968, the Water Act 1973 and the Drought Act 1976. That is quite a mouthful. At this time of night, I say, "Well done, Hazel, for getting that mouthful together!".
	That is confusing and I am glad to see that the Minister is slightly amused. Even the army of civil servants who are employed in their various ways and at different times on this Bill—we have been well supported by civil servants throughout our debates on the Bill—have found it difficult to point us quickly to the correct source or reference. I believe that it is part of our duty as a revising Chamber to ensure, so far as we are able, that the law is clear, understandable and enforceable. I cannot in all conscience say that of this body of legislation. I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, I am pleased to support the amendment and must say, "Well done", to the noble Baroness, Lady Byford, for listing all of the Acts to which we have had to refer during the course of the Bill. Ultimately, it is not for our convenience if there is a consolidation Bill but it is very much for the convenience of the eventual users of legislation, be they industry, individuals or consumers. It would take some time and effort on the part of civil servants to consolidate the Bill but that would be a service. In this country we are not good at making our legislation comprehensible to the general public. We must improve on that; it would be extremely good if we started with water, which is of such general interest to everyone. For those reasons, I am pleased to support the amendment.

Lord Whitty: My Lords, I have considerable sympathy with the intentions of the amendment. I was not being dismissive earlier; I was merely stating the constitutional convention that consolidation of legislation and establishing priorities therefor are a matter for the Law Commission rather than the Government or the House when they react to one particular Bill.
	The situation in relation to water is complicated but I am sure that the noble Lord, Lord Dixon-Smith, will agree that local government legislation or the criminal justice system could do with a bit of consolidation here and there. I am sure that there are many other areas that we could think of, even at this time of night, that are rather lacking in clarity for legislators, let alone the average citizen.
	It is normal practice at the end of each Bill for us to report to the Law Commissioners about whether issues of consolidation are raised. I shall ensure that the House's views are brought to the attention of the Law Commission. Indeed, noble Lords will be aware that the Select Committee on the Constitution earlier expressed concern about the difficulties that were thrown up by the Bill. Although it was reassured by my statement that I should pass those concerns on to the Law Commission, that underlines the need for me to do so. I hope that that will be sufficient for this time of night.

Baroness Byford: My Lords, I am grateful to the Minister. As he knows, when we originally met to look at the Bill, the matter was a huge problem, because we had to go to one authority, and then look at Butterworth, and then we had to look at something else. I am sincerely grateful for his comments that he will refer the contributions that have been made, particularly regarding the amendment. That is an extremely encouraging note when we are drawing towards a close—although we have not finished—at this late stage of the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	In the Title:

Baroness Farrington of Ribbleton: moved Amendment No. 188:
	Line 11, after "England;" insert "to repeal section 1 of the Metropolis Water Act 1852;"
	On Question, amendment agreed to.

Water Bill [HL]

Lord Whitty: My Lords, I beg to move the Motion standing in my name on the Order Paper.
	Moved, That, on Wednesday 9th July, the Water Bill be recommitted to a Committee of the Whole House in respect of any new clauses and related amendments dealing with fluoridation and that Standing Order 47 (No two stages of a Bill to be taken on one day) be dispensed with to enable the remaining stages of the Bill to be taken on the same day as Committee (on Re-commitment).—(Lord Whitty.)

On Question, Motion agreed to.

Licensing Bill [HL]

Returned from the Commons with certain amendments not insisted upon, with a Lords amendment in lieu of words left out of the Bill by a Commons amendment agreed to, with an amendment not insisted on but with amendments proposed in lieu thereof, and with an amendment insisted upon and a Lords amendment disagreed to but with an amendment in lieu thereof; the Commons amendments were ordered to be printed.
	House adjourned at nineteen minutes before midnight.